Papa John's Reports Fourth Quarter and Full-Year 2006 Earnings.2007 Earnings Guidance Reaffirmed LOUISVILLE Louisville (l  `ēvĭl), city (1990 pop. 269,063), seat of Jefferson co., NW Ky., at the Falls of the Ohio; inc. 1780. , Ky. -- Papa John's International, Inc. (NASDAQ NASDAQin full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on : PZZA): Highlights * Fourth quarter earnings per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share of $0.59 in 2006 vs. $0.42 in 2005 ($0.55 in 2006 vs. $0.36 in 2005, excluding the consolidation of the company's franchisee-owned cheese purchasing entity, BIBP BIBP Base d'Information Bibliographique En Patristique BIBP Buddies in Big Places (web comic) Commodities, Inc. (BIBP)) * Fourth quarter 2006 earnings includes a $0.07 benefit from a 53(rd) week of operations and a $0.05 benefit from the settlement of certain tax issues * 37 net Papa John's restaurant openings during the quarter and 89 for all of 2006 * Domestic system-wide comparable sales decreased 0.5% for the quarter and increased 3.1% for the year * Earnings guidance for 2007 reaffirmed at a range of $1.48 to $1.56 per diluted share, excluding the impact of consolidating BIBP's results * Board of Directors approved a $50 million increase to an aggregate of $675 million for repurchases of the company's common stock Papa John's International, Inc. (NASDAQ: PZZA) today announced revenues of $277.9 million for the fourth quarter of 2006, representing an increase of 11.9% from revenues of $248.4 million for the same period in 2005. Net income for the fourth quarter of 2006 was $19.0 million, or $0.59 per diluted share (including a net gain of $1.4 million, or $0.04 per diluted share, from the consolidation of the results of the franchisee-owned cheese purchasing company, BIBP Commodities, Inc. (BIBP), a variable interest entity, and $1.6 million, or $0.05 per diluted share, from the settlement of certain income tax issues), compared to last year's net income of $14.4 million, or $0.42 per diluted share (including a net income gain of $2.0 million, or $0.06 per diluted share, from the consolidation of BIBP). Excluding the impact of BIBP, pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta income from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the for the fourth quarter of 2006 increased $6.9 million (or $0.14 per diluted share, after-tax) from the corresponding 2005 period. As more fully described below, the fourth quarter 2006 pre-tax income results benefited approximately $3.5 million, or $0.07 per diluted share, from an additional week of operations. Revenues were $1.0 billion for 2006, representing an increase of 3.4% from 2005 revenues of $968.8 million. Net income for 2006 was $63.4 million, or $1.92 per diluted share (including a net income gain of $11.8 million, or $0.36 per diluted share, from the consolidation of BIBP, and $0.08 per diluted share from the previously mentioned settlement of certain income tax issues), compared to last year's net income of $46.1 million, or $1.34 per diluted share (including a net income gain of $2.8 million, or $0.08 per diluted share, from the consolidation of BIBP). Excluding the impact of BIBP, pre-tax income from continuing operations increased $12.0 million (or $0.23 per diluted share, after-tax) in 2006 from the corresponding 2005 period, including the benefit of the 53rd week of operations. The company follows a fiscal year ending on the last Sunday Sunday: see Sabbath; week. of December, generally consisting of 52 weeks made up of four 13-week quarters, which are in turn made up of two four-week periods followed by one five-week period. In 2006, the company's fiscal year consisted of 53 weeks, with the additional week added to the fourth quarter (14 weeks) results. The additional week resulted in additional revenues of approximately $20.0 million and additional pre-tax income of approximately $3.5 million, or $0.07 per diluted share for both the fourth quarter and full year of 2006. The following table summarizes the above-mentioned items impacting 2006 earnings per diluted share, as compared to the same periods presented for the prior year: [TABLE OMITTED] "We are very proud of our 2006 performance," commented Papa John's president and chief executive officer, Nigel Travis. "In 2006, Papa John's posted the highest domestic comps among national chains, and for an unprecedented seventh consecutive year, consumers rated Papa John's number one among all QSR QSR Quick Service Restaurant QSR QoS (Quality of Service) Satisfaction Rate QSR Quality System Regulations QSR Quality Status Report QSR Quality System Review QSR Quarterly Status Report QSR Quality System Requirement chains in the prestigious American Customer Satisfaction Index The American Customer Satisfaction Index (ACSI) is a leading indicator of consumer behavior, measuring the satisfaction of consumers across the U.S. economy. The ACSI interviews approximately 80,000 Americans annually and asks about their satisfaction with the goods and (ACSI ACSI Association of Christian Schools International ACSI American Customer Satisfaction Index ACSI Association Canadienne des Sciences de l'Information (French) ACSI American Communications Services, Inc. )." Revenues Comparison Consolidated revenues were $277.9 million for the fourth quarter of 2006, an increase of 11.9% or $29.5 million, including $20.0 million from the additional week of operations mentioned above, over the corresponding 2005 period. Company-owned restaurant sales increased $22.0 million ($13.0 million increase excluding the additional week of operations) due to an increase in the number of equivalent company-owned restaurants open in the 2006 period compared to 2005, reflecting the acquisition of 57 domestic restaurants from franchisees during 2006. Comparable sales at company-owned restaurants for the fourth quarter were relatively flat year-over-year. The remainder of the increase in revenues for the fourth quarter of 2006, as compared to the corresponding 2005 period, was primarily due to the additional week of operations, partially offset by the impact of lower cheese costs on commissary COMMISSARY. An officer whose principal duties are to supply the army with provisions. 2. The Act of April 14, 1818, s. 6, requires that the president, by and with the consent of the senate, shall appoint a commissary general with the rank, pay, and emoluments revenues. For the full-year 2006, consolidated revenues increased $32.8 million to $1.0 billion, or 3.4%, as compared to the full-year 2005. Company-owned restaurant sales increased $13.4 million as an increase in comparable sales of 3.6% and the impact of the 53rd week of operations more than offset a reduction in equivalent units, reflecting the sale of 84 units at the beginning of the fourth quarter of 2005 (the acquisition of 57 franchise restaurants mentioned above substantially occurred in the last five months of 2006). Commissary revenues increased $14.7 million primarily due to increased volumes, which more than offset the impact of lower year-over-year cheese costs. Franchise royalties increased $4.1 million due to a 2.9% increase in comparable sales and additional equivalent units for the full year. Additionally, international revenues increased $4.8 million primarily as a result of additional company-owned restaurants located in the United Kingdom and Mexico. The increases were partially offset by a $3.9 million decrease in revenues for restaurants consolidated as variable interest entities (VIEs). The decrease in revenues from VIE restaurants is a result of the sale of restaurants by two franchisees to third parties during 2005 and 2006, which eliminated the VIE consolidation of such restaurants under Interpretation No. 46, Consolidation of Variable Interest Entities, an Interpretation of Accounting Research Bulletin No. 51 (FIN fin, organ of locomotion characteristic of fish and consisting of thin tissue supported by cartilaginous or bony rays. In some fish, e.g., the eel, a single fin extends from the back, around the tail, and along the ventral surface. 46), and the related consolidation of their operating results, at the time of the respective sales. Operating Results and Cash Flow Operating Results Our pre-tax income from continuing operations for the fourth quarter of 2006 was $27.3 million compared to $21.7 million for the corresponding period in 2005. For the full-year 2006, pre-tax income from continuing operations was $96.2 million compared to $69.6 million for the corresponding period in 2005. Excluding the impact of the consolidation of BIBP, fourth quarter 2006 pre-tax income from continuing operations was $25.4 million, an increase of $6.9 million over 2005 comparable results, and pre-tax income for the full-year 2006 was $77.2 million, an increase of $12.0 million over 2005 comparable results. The increases of $6.9 million and $12.0 million, respectively, in pre-tax income from continuing operations for the three months and full year ended December 31, 2006 (excluding the consolidation of BIBP) include approximately $3.5 million related to the 53rd week of operations in 2006 as noted above and are principally due to the following (analyzed an·a·lyze tr.v. an·a·lyzed, an·a·lyz·ing, an·a·lyz·es 1. To examine methodically by separating into parts and studying their interrelations. 2. Chemistry To make a chemical analysis of. 3. on a segment basis -- see the Summary Financial Data table that follows for the reconciliation of segment income to consolidated income below): * Domestic Company-owned Restaurant Segment. Domestic company-owned restaurants' operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. increased approximately $140,000 and $7.9 million for the three months and full year ended December 31, 2006, respectively, including approximately $1.6 million related to the 53rd week of operations in 2006. Operating income for the quarter decreased $1.5 million, excluding the impact of the 53rd week of operations, primarily due to the inclusion of a $2.1 million gain on the sale of 89 company-owned restaurants in the prior year's comparable quarter. The increase in operating income for the full year is primarily due to fixed-cost leverage and related margin improvement associated with the noted increase in comparable sales (see below) and lower commodity costs (primarily cheese). The acquisition of 54 Papa John's restaurants during the last five months of 2006 did not have a significant impact on 2006 income. * Domestic Commissary Segment. Domestic commissaries' operating income increased approximately $3.8 million and $9.2 million for the three months and full year ended December 31, 2006, respectively. Approximately $1.3 million and $4.3 million of the increase for the three months and full year occurred due to the impact of the 53rd week of operations, income from sales to the Six Flags For the national flags of Texas, see . Six Flags (NYSE: SIX) is the world's largest chain of amusement parks and theme parks and is headquartered in New York City. There are 20 such parks run by Six Flags. , Inc. theme-park operator and the closing of the Jackson Jackson. 1 City (1990 pop. 37,446), seat of Jackson co., S Mich., on the Grand River; inc. 1857. It is an industrial and commercial center in a farm region. QCC QCC Queensborough Community College (New York) QCC Quality Core Curriculum QCC Qwest Communications Corporation QCC Quinsigamond Community College (Worcester, MA) QCC Quality Control Circle in 2005. The remainder of the increase is principally due to additional margin on increased sales volumes. * Domestic Franchising Segment. Domestic franchising operating income increased approximately $623,000 and $1.7 million for the three months and full year ended December 31, 2006, respectively, including approximately $1.0 million related to the 53rd week of operations in 2006. The full-year increase of $1.7 million reflected an increase in royalties of $4.1 million due to an increase in comparable sales (see below) and an increase in equivalent units during 2006. The increase in royalties during 2006 was partially offset by an increase in administrative costs administrative costs, n.pl the overhead expenses incurred in the operation of a dental benefits program, excluding costs of dental services provided. related to the field organizational restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). implemented in late 2005 to better drive the performance of our domestic franchise operations. * International Segment. The international segment, excluding the Perfect Pizza operations in the United Kingdom sold in March 2006, reported operating losses operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. of $2.1 million and $8.9 million for the three months and full year ended December 31, 2006, respectively, as compared to operating losses of $2.3 million and $5.0 million for the corresponding 2005 periods. The decline in operating results for the full year was principally due to increased costs related to the development of our support infrastructure throughout the international segment, including the United Kingdom, to support the accelerated development of both company-owned and franchised Papa John's branded restaurants in our international markets. In addition, the company incurred a $470,000 charge in the second quarter of 2006 related to the reorganization of one of our international operating units operating unit A type of operating company that engages in transactions with outsiders and that is owned by another business. For example, in 1995 the stockholders of Capital Cities/ABC approved a $19 billion merger with the Walt Disney Company, whereupon . During 2005, the international segment recorded a $1.1 million impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. charge associated with the United Kingdom subsidiary. The 53rd week of operations in 2006 did not have a significant impact on this segment. * All Others Segment. The operating income for the "All others" reporting segment increased $216,000 and $1.3 million for the three months and full year ended December 31, 2006 as compared to the corresponding 2005 periods. The increase in operating income for this segment for the full-year 2006 was primarily due to improved operating results of our insurance agency and online ordering businesses and our partnership development activities. The 53rd week of operations in 2006 did not have a significant impact on this segment. * Unallocated Corporate Segment. The unallocated corporate expenses decreased $2.2 million and increased $3.4 million for the three months and full year ended December 31, 2006, respectively, as compared to the corresponding prior year periods, including approximately $300,000 of additional expenses related to the 53rd week of operations in 2006. The decrease in expenses for the three-month period was primarily due to a discretionary contribution of $1.8 million in the fourth quarter of 2005 to the Papa John's Marketing Fund to fund additional national television flights related to the launch of Papa's Perfect Pan Pizza, and a decrease in business unit and corporate management bonuses in 2006. The increase for the full year was primarily due to an increase in equity compensation and executive performance unit incentives (see discussion below) and an increase in marketing efforts, primarily related to non-traditional initiatives, such as our previously discussed marketing agreement with Six Flags, Inc. The full-year increase in 2006 was partially offset by the previously mentioned 2005 contribution to the Papa John's Marketing Fund. The increase in equity compensation and executive performance unit incentive compensation in 2006 was due to the following: Stock options were awarded to management in late March 2005 and April 2006, each with a two-year cliff vesting Cliff Vesting A type of vesting that occurs entirely at a specified time rather than gradually. Notes: Until the specified time there is no vesting, at which point the benefit becomes fully vested. period. The company also granted performance-based restricted stock during the second quarter of 2006 to certain employees with a performance period of three years. There were no such grants awarded in 2004; accordingly, the timing and layering effect of the vesting Vesting The process by which employees accrue non-forfeitable rights over employer contributions that are made to the employee's qualified retirement plan account. Notes: provisions of the 2005 and 2006 equity-based awards resulted in an increase in expense recognition in 2006 as compared to 2005. Stock compensation expense recognized for the three months and full year ended December 31, 2006 was $1.4 million and $4.5 million, respectively, as compared to $720,000 and $2.4 million for the corresponding 2005 periods. Additionally, performance units were awarded in 2005 and 2006 to certain members of management with each award having a three-year performance period; no such awards were made prior to 2005. Further, the ultimate cost associated with the performance units is based on the company's ending stock price and total shareholder return relative to a peer group over the three-year performance period ending in December 2007 for the 2005 program and December 2008 for the 2006 program, with the award value paid in cash following the end of the respective performance periods. The total expense related to the 2005 and 2006 performance unit programs was approximately $384,000 in the fourth quarter of 2006 as compared to $747,000 in the fourth quarter of 2005 and $2.7 million for the full-year 2006 as compared to $1.8 million for the corresponding 2005 period. Net interest expense for the three-month period ended December 31, 2006 was flat, as compared to the corresponding 2005 period. For the full-year 2006, net interest expense decreased $1.3 million principally due to a decrease in our average outstanding debt balance during the year and an increase in investment income. The income tax rate was 30.5% and 34.5% for the three months and full year ended December 31, 2006, respectively, compared to 35.2% and 36.4% for the corresponding 2005 periods. The decrease in the effective tax rate in 2006 was primarily due to the settlement of certain income tax issues of approximately $2.5 million. Our estimated tax Federal and state tax laws require a quarterly payment of estimated taxes due from corporations, trusts, estates, non-wage employees, and wage employees with income not subject to withholding. rate for 2007 is approximately 36.5%, excluding the impact of the future potential favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. settlement of other income tax issues, the likelihood of which cannot be estimated with any certainty at this time. Cash Flow Cash flow provided by operating activities from continuing operations was $85.2 million for 2006 as compared to $82.1 million for 2005. The consolidation of BIBP increased cash flow from operations Cash flow from operations A firm's net cash inflow resulting directly from its regular operations (disregarding extraordinary items such as the sale of fixed assets or transaction costs associated with issuing securities), calculated as the sum of net income plus noncash expenses by approximately $19.0 million and $4.5 million in 2006 and 2005, respectively. Excluding the impact of the consolidation of BIBP, cash flow from continuing operations decreased $11.4 million in 2006 as compared to 2005, primarily due to unfavorable working capital changes with accounts receivable accounts receivable n. the amounts of money due or owed to a business or professional by customers or clients. Generally, accounts receivable refers to the total amount due and is considered in calculating the value of a business or the business' problems in paying and other liabilities other liabilities Small and relatively insignificant liabilities. For financial reporting purposes, firms often combine small liabilities into this single category rather than listing each liability separately. . The 2005 operating cash flows Operating cash flow Earnings before depreciation minus taxes. Measures the cash generated from operations, not counting capital spending or working capital requirements. were favorably fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. impacted by the collection of unusually high prior year accounts receivable balances. The 2006 operating cash flows were negatively impacted by increased payments of claims liabilities related to insurance policies issued by the company's captive insurance Captive insurance companies are limited purpose insurance companies established with the specific objective of financing risks emanating from their parent group or groups, they sometimes also insure risks of the parent company's customers. subsidiary in 2000 through 2004. In addition, a decrease in cash flow from continuing operations occurred due to the classification in 2006 of $6.5 million of excess tax benefits related to the exercise of non-qualified stock options Non-qualified stock options are stock options which do not qualify for the special treatment accorded to incentive stock options. Incentive stock options are only available for employees and other restrictions apply for them. from operating activities to financing activities, as required by Statement of Financial Accounting Standards (SFAS SFAS Statement of Financial Accounting Standards SFAS Special Forces Assessment and Selection SFAS Student Financial Aid Services SFAS Sport Fishing Association of Singapore SFAS Safety Features Actuation System SFAS Statewide Fixed Assets System ) No. 123(R), Share-Based Payment. Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. Filing See the Management's Discussion and Analysis Management's discussion and analysis (MD&A) A report from management to shareholders that accompanies the firm's financial statements in the annual report. It explains the period's financial results and enables management to discuss topics that may not be apparent in the financial of Financial Condition and Results of Operations section of our annual Form 10-K filed with the Securities and Exchange Commission for additional information concerning operating results and cash flows for the full year ended December 31, 2006. Comparable Sales and Unit Count As previously announced, domestic system-wide comparable sales for the fourth quarter decreased 0.5% (composed of a 0.3% increase at company-owned restaurants and a 0.7% decrease at franchised restaurants). Total system-wide international sales for Papa John's branded units increased 37.4% for the quarter, on a constant U.S. dollar basis, over the comparable period last year (27.2% excluding the impact of the 53rd week of operations in 2006). Domestic system-wide comparable sales for the full year ended December 31, 2006 increased 3.1% (composed of a 3.6% increase at company-owned restaurants and a 2.9% increase at franchised restaurants). Total system-wide international sales for Papa John's branded units increased 30.4% for the full year, on a constant U.S. dollar basis, over the comparable period last year (27.6% excluding the impact of the 53rd week of operations in 2006). The company announced during the fourth quarter that December 2006 would be the last month for reporting monthly domestic comparable sales results. Beginning in 2007, domestic comparable sales results will be reported on a quarterly basis, aligning a·lign v. a·ligned, a·lign·ing, a·ligns v.tr. 1. To arrange in a line or so as to be parallel: align the tops of a row of pictures; aligned the car with the curb. with the reporting methodology of our two primary national competitors. In addition to avoiding the potential competitive disadvantage of continuing to report monthly, we believe reporting on a quarterly basis will provide a more meaningful view of our long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. performance trends and strategies. During the fourth quarter of 2006, 31 domestic (8 company-owned and 23 franchised) and 29 international franchised restaurants were opened while 18 domestic and 5 international franchised restaurants were closed. During the full-year 2006, 124 domestic (19 company-owned and 105 franchised) and 87 international (one company-owned and 86 franchised) restaurants were opened while 66 domestic (one company-owned and 65 franchised) and 56 international Papa John's restaurants were closed. Our total domestic development pipeline as of December 31, 2006 included approximately 300 restaurants scheduled to open over the next seven years. At December 31, 2006, there were 3,015 Papa John's restaurants (588 company-owned and 2,427 franchised) operating in 49 states and 26 countries. The company-owned unit count includes 117 restaurants operated in majority-owned domestic joint venture arrangements, the operating results of which are fully consolidated into the company's results. Acquisition / Divestiture The breakup of AT&T. By federal court order, AT&T divested itself on January 1, 1984 of its 23 operating companies, which became known as the Regional Bell Operating Companies (RBOCs). Activity The company acquired 11 franchised restaurants in the Raleigh, North Carolina For other uses of this name, see Raleigh. Raleigh (IPA: /ˈrɑli/, ral-ee) is the capital of the State of North Carolina and the county seat of Wake County. market effective September 25, 2006 (beginning of period 10). Effective December 5, 2006, the company acquired the operations of our Beijing, China franchisee, consisting of five restaurants, a quality control center and the return of the initial rights for the development of Papa John's restaurants in Beijing and the surrounding sur·round tr.v. sur·round·ed, sur·round·ing, sur·rounds 1. To extend on all sides of simultaneously; encircle. 2. To enclose or confine on all sides so as to bar escape or outside communication. n. region. These acquisitions did not significantly impact operating income for 2006 as management transition costs substantially offset incremental Additional or increased growth, bulk, quantity, number, or value; enlarged. Incremental cost is additional or increased cost of an item or service apart from its actual cost. unit level operating income during that time frame. Subsequent to December 31, 2006, the company acquired four restaurants in the Philadelphia market. The acquisition was effective on January 29, 2007. Additionally, the company sold its three company-owned restaurants in Mexico City Mexico City Spanish Ciudad de México City (pop., 2000: city, 8,605,239; 2003 metro. area est., 18,660,000), capital of Mexico. Located at an elevation of 7,350 ft (2,240 m), it is officially coterminous with the Federal District, which occupies 571 sq mi , Mexico to a franchisee in January 2007, in connection with the execution of a development agreement for 60 new Papa John's restaurants in that market over an eight-year period. International Update A total of 29 restaurants were opened in all international markets during the quarter, of which eight were located in our fastest-growing markets, Korea and China. As of December 31, 2006, we had a total of 101 corporate and franchised restaurants open and contractual agreements for an additional 389 Papa John's franchised restaurants to be opened over the next eight years in those two countries. We also have a ten-year, 100-unit development agreement for Northern India, of which four units are currently open. In addition, we recently signed a development agreement for 75 restaurants to be opened in South and West India West` In´di`a 1. Belonging or relating to the West Indies. West India tea (Bot.) a shrubby plant (Capraria biflora) having oblanceolate toothed leaves which are sometimes used in the West Indies as a substitute for tea. over the next six years. In December 2006 and January 2007, we signed two development agreements in Mexico for a total of 70 units to be opened over the next eight years. Our total international development pipeline as of December 31, 2006 included 847 restaurants scheduled to open over the next nine years. In March 2006, the company sold its Perfect Pizza operations in the United Kingdom, consisting of the franchised units and related distribution operations. In accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with U.S. generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting , we have classified the Perfect Pizza operating results, including directly associated G&A expenses, as "discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. " for both 2006 and 2005. The following summarizes the discontinued operations for 2006 and 2005 (in 000's): [TABLE OMITTED] Share Repurchase Share Repurchase A program by which a company buys back its own shares from the marketplace, reducing the number of outstanding shares. This is usually an indication that the company's management thinks the shares are undervalued. Activity The company repurchased approximately 1.4 million shares of its common stock at an average price of $30.68 per share, or a total of $42.3 million, during the fourth quarter of 2006, and 3.4 million shares of its common stock at an average of $31.22 per share, or a total of $106.3 million, during the full-year 2006. A total of 127,000 and 1.0 million shares of common stock, respectively, were issued upon the exercise of stock options for the three months and full year ended December 31, 2006. As a result, there were 32.2 million diluted weighted average shares outstanding for the fourth quarter of 2006 as compared to 34.2 million for the same period in 2005. Approximately 30.7 million actual shares of the company's common stock were outstanding as of December 31, 2006. Since the inception of the share repurchase program in 1999 through the end of 2006, the company has repurchased approximately 38.1 million shares at a total cost of $602.2 million (average price of $15.80 per share). Subsequent to year-end, through February 20, 2007, the company repurchased an additional $22.9 million of common stock (793,000 shares at an average price of $28.91 per share). As recently announced, in February 2007, the company's board of directors increased the authorization The right or permission to use a system resource; the process of granting access. See access control. for the repurchase re·pur·chase tr.v. re·pur·chased, re·pur·chas·ing, re·pur·chas·es To buy (something) again. n. The act of buying something that one previously sold or owned. Noun 1. of common stock through December 30, 2007 by $50 million, to an aggregate of $675 million since the inception of the repurchase program in 1999. The company's share repurchase activity increased earnings per diluted share from continuing operations by $0.03 and $0.09 for the three months and full year ended December 31, 2006, respectively. 2007 Earnings Guidance Reaffirmed The company reaffirms its previously announced 2007 earnings per diluted share guidance in the range of $1.48 to $1.56 for the 52-week year. The comparable base earnings results for 2006 were $1.40 per diluted share, as noted on page 2. The projected earnings guidance excludes any impact from the consolidation of the results of the franchisee-owned cheese purchasing company, BIBP Commodities, Inc. (BIBP), a variable interest entity, in accordance with FIN 46. Forward-Looking Statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. Except for historical information, this announcement contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended a·mend v. a·mend·ed, a·mend·ing, a·mends v.tr. 1. To change for the better; improve: amended the earlier proposal so as to make it more comprehensive. 2. , and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements reflect management's expectations based upon currently available information and data; however, actual results are subject to future events and uncertainties, which could cause actual results to materially differ from those projected in these statements. Certain factors that can cause actual results to materially differ include: the uncertainties associated with litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. ; changes in pricing or other marketing or promotional strategies by competitors, which may adversely affect sales; new product and concept developments by food industry competitors; the ability of the company and its franchisees to meet planned growth targets and operate new and existing restaurants profitably; increases in or sustained high cost levels of food, paper, utilities, fuel, employee compensation and benefits, insurance and similar costs; the ability to obtain ingredients from alternative suppliers, if needed; health- or disease-related disruptions or consumer concerns about commodities supplies; the selection and availability of suitable restaurant locations; negotiation of suitable lease or financing terms; constraints CONSTRAINTS - A language for solving constraints using value inference. ["CONSTRAINTS: A Language for Expressing Almost-Hierarchical Descriptions", G.J. Sussman et al, Artif Intell 14(1):1-39 (Aug 1980)]. on permitting and construction of restaurants; local governmental agencies' restrictions on the sale of certain food products; higher-than-anticipated construction costs; the hiring, training and retention of management and other personnel; changes in consumer taste, demographic trends, traffic patterns and the type, number and location of competing restaurants; franchisee relations; federal and state laws governing gov·ern v. gov·erned, gov·ern·ing, gov·erns v.tr. 1. To make and administer the public policy and affairs of; exercise sovereign authority in. 2. such matters as wages, benefits, working conditions, citizenship requirements and overtime, including pending legislation to increase the federal minimum wage; and labor shortages A Labor shortage is an economic condition in which there are insufficient qualified candidates (employees) to fill the market-place demands for employment at any price. This condition is sometimes referred to by Economists as "an insufficiency in the labor force. in various markets resulting in higher required wage rates. The above factors might be especially harmful to the financial viability of franchisees or company-owned operations in under-penetrated or emerging markets, leading to greater unit closings than anticipated. Increases in projected claims losses for the company's self-insured self-insured Self fund Health insurance adjective Referring to the practice of carrying an individual health insurance policy for oneself; self insurance is usually more expensive than group insurance coverage or within the captive captive said of naturally wild or feral animals kept in captivity for educational and scientific investigation with no attempt being made to domesticate them. franchise insurance program could have a significant impact on our operating results. Additionally, domestic franchisees are only required to purchase seasoned sauce and dough from our QC Centers and changes in purchasing practices by domestic franchisees could adversely affect the financial results of our QC Centers. Our international operations Internal Operations (I.O., IO or I/O) is a fictional American Intelligence Agency in Wildstorm comics. It was originally called International Operations. I.O. first appeared in WildC.A.T.S. volume 1 #1 (August, 1992) and was created by Brandon Choi and Jim Lee. are subject to additional factors, including economic, political and health conditions in the countries in which the company or its franchisees operate; currency regulations and fluctuations; differing business and social cultures and consumer preferences; diverse government regulations and structures; ability to obtain high-quality ingredients and other commodities in a cost-effective cost-effective, n the minimal expenditure of dollars, time, and other elements necessary to achieve the health care result deemed necessary and appropriate. manner; and differing interpretation of the obligations established in franchise agreements with international franchisees. Further information regarding factors that could affect the company's financial and other results is included in the company's Forms 10-Q and 10-K, filed with the Securities and Exchange Commission. Conference Call A conference call is scheduled for February 28, 2007 at 10:00 EST EST electroshock therapy. EST abbr. electroshock therapy to review fourth quarter earnings and full-year results. The call can be accessed from the company's web page at www.papajohns.com in a listen-only mode, or dial 800-487-2662 for participation in the question and answer session. International participants may dial 706-679-8452. The conference call will be available for replay beginning February 28, 2007, at approximately noon through March 2, 2007, at midnight EST. The replay can be accessed from the company's web page at www.papajohns.com or by dialing 800-642-1687 (pass code 4892823). International participants may dial 706-645-9291 (pass code 4892823). [TABLE OMITTED] [TABLE OMITTED] For more information about the company, please visit www.papajohns.com. [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] |
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