As previously announced, effective April 23, 2012, we acquired 56 franchised Papa John’s restaurants in the Denver and Minneapolis markets, six of which were subsequently refranchised. The purchase price, which was paid in cash, was $5.2 million net of $700,000 divestiture proceeds from the six restaurants sold. We do not expect the acquisition to have a material impact on our 2012 operating results.
Marketing Incentive Contribution
As previously announced, in connection with a new multi-year supplier agreement, the company received a $5.0 million supplier marketing payment in the first quarter of 2012. The company is recognizing the supplier marketing payment evenly as income over the five-year term of the agreement ($250,000 per quarter). The company then contributed the supplier marketing payment to the Papa John’s Marketing Fund (“PJMF”), an unconsolidated, non-profit corporation, for the benefit of domestic restaurants. The company’s contribution to PJMF was fully expensed in the first quarter of 2012.PJMF elected to distribute the $5.0 million supplier marketing payment to the domestic system as advertising credits in the first quarter of 2012. Our domestic company-owned restaurants’ portion of the adverting credits resulted in an increase in income before income taxes of approximately $1.0 million in the first quarter. The overall impact of these transactions, defined as the “Incentive Contribution,” increased income before income taxes $250,000 in the second quarter of 2012 and reduced income before income taxes by approximately $3.5 million for the six-month period, as outlined in the table below. The impact for full-year 2012 will be a reduction to income before income taxes of approximately $3.0 million (diluted earnings per share reduction of $0.08). The following table reconciles our GAAP financial results to the adjusted financial results, excluding the impact of the Incentive Contribution, for the three and six months ended June 24, 2012:
|Three Months Ended||Six Months Ended|
|June 24,||June 26,||June 24,||June 26,|
|(In thousands, except per share amounts)||2012||2011||2012||2011|
|Income before income taxes, as reported||$||24,240||$||19,067||$||51,378||$||45,847|
|Income before income taxes, excluding Incentive Contribution||$||23,990||$||19,067||$||54,849||$||45,847|
|Net income, as reported||$||14,769||$||12,124||$||31,513||$||28,551|
|Net income, excluding Incentive Contribution||$||14,605||$||12,124||$||33,788||$||28,551|
|Earnings per diluted share, as reported||$||0.61||$||0.47||$||1.30||$||1.11|
|Earnings per diluted share, excluding Incentive Contribution||$||0.61||$||0.47||$||1.39||$||1.11|
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV