What changed in this filing

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Item 1. Financial Statements

2022-08-04 compared with 2022-05-05 · 267 added, 180 removed, 466 unchanged (49% of the section changed)

3 unchanged sentences

Condensed Consolidated Balance Sheets

(In thousands, except per share amounts)

(In thousands, except per share amounts) June 26,

2022 December 26,

Current assets:

3 unchanged sentences

Income tax receivable 4,017 9,386

Inventories 38,076 34,981

Prepaid expenses and other current assets 49,743 46,310

Assets held for sale

Total current assets 239,788 255,009

3 unchanged sentences

Notes receivable, less current portion, net 19,703 35,504

Goodwill 70,731 80,632

Deferred income taxes 8,657 5,156

Other assets 76,650 88,384

Total assets $ 836,272 $ 885,704

Liabilities, Redeemable noncontrolling interests and Stockholders’ deficit

6 unchanged sentences

Current operating lease liabilities 21,485 22,543

Liabilities held for sale

Total current liabilities 250,477 287,424

9 unchanged sentences

Common stock ($ 0.01 par value per share;

issued 49,074 at March 27, 2022 and 49,002 at December 26, 2021)

issued 49,096 at June 26, 2022 and 49,002 at December 26, 2021)

Additional paid-in capital 442,255 445,126

1 unchanged sentence

Retained earnings 193,934 183,157

Treasury stock ( 13,399 shares at March 27, 2022 and 13,205 shares at December 26, 2021, at cost)

Treasury stock ( 13,848 shares at June 26, 2022 and 13,205 shares at December 26, 2021, at cost)

( 875,205 ) ( 806,472 )

Total stockholders’ deficit ( 249,559 ) ( 187,670 )

6 unchanged sentences

Condensed Consolidated Statements of Operations

Three Months Ended

(In thousands, except per share amounts)

Three Months Ended Six Months Ended

(In thousands, except per share amounts) June 26,

2022 June 27,

2021 June 26,

2022 June 27,

Domestic Company-owned restaurant sales $ 171,411 $ 196,124 $ 370,176 $ 393,358

17 unchanged sentences

Income before income taxes 32,823 40,988 42,995 84,203

Income tax (benefit) expense

Income tax expense 7,093 7,398 5,838 15,330

Net income before attribution to noncontrolling interests 25,730 33,590 37,157 68,873

3 unchanged sentences

Net income attributable to the Company $ 25,433 $ 32,254 $ 35,927 $ 66,137

Dividends on redemption of Series B Convertible Preferred Stock — ( 109,852 ) — ( 109,852 )

Dividends paid to participating securities ( 82 ) ( 2,300 ) ( 141 ) ( 5,827 )

Net income attributable to participating securities ( 111 ) — ( 93 ) —

Net income attributable to common shareholders

Basic earnings per common share

Diluted earnings per common share

Net income (loss) attributable to common shareholders $ 25,240 $ ( 79,898 ) $ 35,693 $ ( 49,542 )

Basic earnings (loss) per common share $ 0.71 $ ( 2.30 ) $ 1.00 $ ( 1.47 )

Diluted earnings (loss) per common share $ 0.70 $ ( 2.30 ) $ 0.99 $ ( 1.47 )

Basic weighted average common shares outstanding 35,624 34,729 35,775 33,739

1 unchanged sentence

Dividends declared per common share $ 0.350 $ 0.225 $ 0.700 $ 0.450

See accompanying notes.

Papa John’s International, Inc.

1 unchanged sentence

Condensed Consolidated Statements of Comprehensive Income

Three Months Ended

(In thousands)

Three Months Ended Six Months Ended

(In thousands) June 26,

2022 June 27,

2021 June 26,

2022 June 27,

Net income before attribution to noncontrolling interests $ 25,730 $ 33,590 $ 37,157 $ 68,873

Other comprehensive income, before tax:

Other comprehensive (loss) income, before tax:

Foreign currency translation adjustments ( 4,109 ) 437 ( 4,970 ) 1,496

Interest rate swaps (1) 1,877 1,817 3,589 3,612

Other comprehensive income, before tax

Other comprehensive (loss) income, before tax ( 2,232 ) 2,254 ( 1,381 ) 5,108

Income tax effect:

2 unchanged sentences

Income tax effect 514 ( 518 ) 318 ( 1,175 )

Other comprehensive income, net of tax

Other comprehensive (loss) income, net of tax ( 1,718 ) 1,736 ( 1,063 ) 3,933

Comprehensive income before attribution to noncontrolling interests 24,012 35,326 36,094 72,806

2 unchanged sentences

Comprehensive income attributable to the Company $ 23,715 $ 33,990 $ 34,864 $ 70,070

(1) Amounts reclassified out of accumulated other comprehensive loss into net interest expense include $ 535 and ($ 1,709 ) for the three months ended March 27, 2022 and March 28, 2021, respectively.

(2) The income tax effects of amounts reclassified out of accumulated other comprehensive loss into net interest expense were ($ 120 ) and $ 385 for the three months ended March 27, 2022 and March 28, 2021, respectively.

_______________

(1) Amounts reclassified out of accumulated other comprehensive loss into net interest expense include $( 735 ) and $( 200 ) for the three and six months ended June 26, 2022, respectively, and $( 1,730 ) and $( 3,439 ) for the three and six months ended June 27, 2021, respectively.

(2) The income tax effects of amounts reclassified out of accumulated other comprehensive loss into net interest expense were $ 165 and $ 45 for the three and six months ended June 26, 2022, respectively, and $ 388 and $ 771 for the three and six months ended June 27, 2021, respectively.

See accompanying notes.

3 unchanged sentences

Papa John’s International, Inc.

Noncontrolling

(In thousands)

(In thousands) Common

Outstanding Common

Stock Additional

Capital Accumulated

Comprehensive

Loss Retained

Earnings Treasury

Stock Noncontrolling

Subsidiaries Total

Stockholders’

For the three months ended March 27, 2022

For the three months ended June 26, 2022

Balance at March 27, 2022 35,675 $ 491 $ 436,225 $ ( 9,316 ) $ 181,124 $ ( 832,603 ) $ 15,635 $ ( 208,444 )

Net income (1) — — — — 25,433 — 279 25,712

Other comprehensive (loss), net of tax — — — ( 1,718 ) — — — ( 1,718 )

Cash dividends on common stock — — 48 — ( 12,541 ) — — ( 12,493 )

Exercise of stock options 22 — 1,167 — — — — 1,167

Acquisition of Company common stock ( 452 ) — — — — ( 42,762 ) — ( 42,762 )

Stock-based compensation expense — — 4,925 — — — — 4,925

Issuance of restricted stock 2 — ( 81 ) — — 81 — —

Tax payments for equity award issuances ( 1 ) — ( 65 ) — — — — ( 65 )

Distributions to noncontrolling interests — — — — — — ( 150 ) ( 150 )

Other 2 — 36 — ( 82 ) 79 ( 3 ) 30

Balance at June 26, 2022 35,248 $ 491 $ 442,255 $ ( 11,034 ) $ 193,934 $ ( 875,205 ) $ 15,761 $ ( 233,798 )

For the six months ended June 26, 2022

Balance at December 26, 2021 35,797 $ 490 $ 445,126 $ ( 9,971 ) $ 183,157 $ ( 806,472 ) $ 15,212 $ ( 172,458 )

Net income (1) — — — — 35,927 — 702 36,629

Other comprehensive income, net of tax

Other comprehensive (loss), net of tax — — — ( 1,063 ) — — — ( 1,063 )

Cash dividends on common stock — — 95 — ( 25,196 ) — — ( 25,101 )

4 unchanged sentences

Tax payments for equity award issuances ( 70 ) — ( 7,527 ) — — — — ( 7,527 )

Balance at March 27, 2022

(1) Net income to the Company for the three months ended March 27, 2022 excludes $ 510 allocable to the redeemable noncontrolling interests for our joint venture arrangements.

At March 27, 2022, the accumulated other comprehensive loss of $ 9,316 was comprised of net unrealized foreign currency translation loss of $ 5,533 and net unrealized loss on the interest rate swap agreements of $ 3,783 .

Distributions to noncontrolling interests — — — — — — ( 150 ) ( 150 )

Other 6 — 3 — 46 288 (3) 334

Balance at June 26, 2022 35,248 $ 491 $ 442,255 $ ( 11,034 ) $ 193,934 $ ( 875,205 ) $ 15,761 $ ( 233,798 )

_______________

(1) Net income to the Company for the three and six months ended June 26, 2022 excludes income of $ 18 and $ 528 allocable to the redeemable noncontrolling interests for our joint venture arrangements.

At June 26, 2022, the accumulated other comprehensive loss of $ 11,034 was comprised of net unrealized foreign currency translation loss of $ 8,696 and net unrealized loss on the interest rate swap agreements of $ 2,338 .

See accompanying notes.

Papa John’s International, Inc.

and Subsidiaries

Condensed Consolidated Statements of Stockholders’ Deficit (continued)

Papa John’s International, Inc.

Noncontrolling

(In thousands)

(In thousands) Common

Outstanding Common

Stock Additional

Capital Accumulated

Comprehensive

Loss Retained

Earnings Treasury

Stock Noncontrolling

Subsidiaries Total

Stockholders’

For the three months ended March 28, 2021

For the three months ended June 27, 2021

Balance at March 28, 2021 32,681 $ 453 $ 251,285 $ ( 11,971 ) $ 242,119 $ ( 737,268 ) $ 15,282 $ ( 240,100 )

Net income (1) — — — — 32,254 — 623 32,877

Other comprehensive income, net of tax — — — 1,736 — — — 1,736

Repurchase and conversion of Series B Convertible Preferred Stock 3,489 35 174,631 — ( 110,783 ) — — 63,883

Cash dividends on common stock — — 31 — ( 7,471 ) — — ( 7,440 )

Cash dividends on preferred stock — — — — ( 709 ) — — ( 709 )

Exercise of stock options 107 1 5,801 — — — — 5,802

Acquisition of Company common stock ( 68 ) — — — — ( 6,921 ) — ( 6,921 )

Stock-based compensation expense — — 4,089 — — — — 4,089

Issuance of restricted stock 5 — ( 294 ) — — 294 — —

Tax payments for equity award issuances — — ( 52 ) — — — — ( 52 )

Distributions to noncontrolling interests — — — — — — ( 615 ) ( 615 )

Other 1 — 117 — ( 641 ) 76 — ( 448 )

Balance at June 27, 2021 36,215 $ 489 $ 435,608 $ ( 10,235 ) $ 154,769 $ ( 743,819 ) $ 15,290 $ ( 147,898 )

For the six months ended June 27, 2021

Balance at December 27, 2020 32,545 $ 453 $ 254,103 $ ( 14,168 ) $ 219,158 $ ( 741,724 ) $ 15,239 $ ( 266,939 )

1 unchanged sentence

Other comprehensive income, net of tax — — — 3,933 — — — 3,933

Repurchase and conversion of Series B Convertible Preferred Stock 3,489 35 174,631 — ( 110,783 ) — — 63,883

Cash dividends on common stock — — 62 — ( 14,906 ) — — ( 14,844 )

4 unchanged sentences

Issuance of restricted stock 109 — ( 5,665 ) — — 5,665 — —

Tax effect of restricted stock awards

Tax payments for equity award issuances — — ( 3,887 ) — — — — ( 3,887 )

Distributions to noncontrolling interests — — — — — — ( 1,185 ) ( 1,185 )

Balance at March 28, 2021

(1) Net income to the Company for the three months ended March 28, 2021 excludes $ 787 allocable to the redeemable noncontrolling interests for our joint venture arrangements.

At March 28, 2021, the accumulated other comprehensive loss of $ 11,971 was comprised of net unrealized foreign currency translation loss of $ 2,977 and net unrealized loss on the interest rate swap agreements of $ 8,994 .

Other 7 — 63 — ( 716 ) 428 — ( 225 )

Balance at June 27, 2021 36,215 $ 489 $ 435,608 $ ( 10,235 ) $ 154,769 $ ( 743,819 ) $ 15,290 $ ( 147,898 )

_______________

(1) Net income to the Company for the three and six months ended June 27, 2021 excludes $ 713 and $ 1,500 allocable to the redeemable noncontrolling interests for our joint venture arrangements.

At June 27, 2021, the accumulated other comprehensive loss of $ 10,235 was comprised of net unrealized foreign currency translation loss of $ 2,641 and net unrealized loss on the interest rate swap agreements of $ 7,594 .

See accompanying notes.

2 unchanged sentences

Condensed Consolidated Statements of Cash Flows

Three Months Ended

(In thousands)

Six Months Ended

(In thousands) June 26,

2022 June 27,

Operating activities

6 unchanged sentences

Stock-based compensation expense 9,100 8,202

Other ( 2,071 ) 467

Changes in operating assets and liabilities, net of acquisitions:

1 unchanged sentence

Income tax receivable 5,369 189

Inventories ( 3,815 ) 430

Prepaid expenses and other current assets ( 3,901 ) 1,092

7 unchanged sentences

Purchases of property and equipment ( 30,744 ) ( 21,543 )

Notes issued ( 1,098 ) ( 5,263 )

Repayments of notes issued 6,743 7,922

Acquisitions, net of cash acquired ( 1,250 ) ( 699 )

Proceeds from refranchising, net of cash transferred 13,588 —

Other 238 116

Net cash used in investing activities ( 12,523 ) ( 19,467 )

2 unchanged sentences

Proceeds from exercise of stock options 1,908 8,100

Repurchase of Series B Convertible Preferred Stock — ( 188,647 )

Acquisition of Company common stock ( 75,471 ) ( 8,188 )

4 unchanged sentences

Repayments of term loan — ( 10,000 )

Other 1,348 ( 1,691 )

Net cash used in financing activities ( 50,677 ) ( 142,871 )

7 unchanged sentences

Notes to Condensed Consolidated Financial Statements (Unaudited)

March 27, 2022

June 26, 2022

Basis of Presentation

2 unchanged sentences

In the opinion of management, all adjustments, consisting of normal recurring accruals, considered necessary for a fair presentation have been included.

Operating results for the three months ended March 27, 2022 are not necessarily indicative of the results that may be expected for the fiscal year ending December 25, 2022.

Operating results for the three and six months ended June 26, 2022 are not necessarily indicative of the results that may be expected for the fiscal year ending December 25, 2022.

For further information, refer to the consolidated financial statements and footnotes thereto included in the Annual Report on Form 10-K for Papa John’s International, Inc.

3 unchanged sentences

The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes.

Significant items that are subject to such estimates and assumptions include allowance for credit losses on accounts and notes receivable, intangible assets, contract assets and contract liabilities, including the online customer loyalty program obligation and gift card breakage, right-of-use assets and lease liabilities, insurance reserves and tax reserves.

Significant items that are subject to such estimates and assumptions include allowance for credit losses on accounts and notes receivable, contract assets and contract liabilities, including the online customer loyalty program obligation and gift card breakage, right-of-use assets and lease liabilities, 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.

3 unchanged sentences

PJMF collects a percentage of revenues from Company-owned and franchised restaurants in the United States for the purpose of designing and administering advertising and promotional programs.

PJMF is a variable interest entity (“VIE”) that funds its operations with ongoing financial support and contributions from the domestic restaurants, of which approximately 80 % are franchised ( 85 % following the divestiture of the Company’s interest in one joint venture subsequent to the end of the first quarter that included 90 restaurants as discussed in Note 10) and does not have sufficient equity to fund its operations without these ongoing financial contributions.

PJMF is a variable interest entity (“VIE”) that funds its operations with ongoing financial support and contributions from the domestic restaurants, of which approximately 80 percent are franchised ( 85 percent following the divestiture of the Company’s interest in one joint venture in the second quarter that included 90 restaurants as discussed in Note 10) and does not have sufficient equity to fund its operations without these ongoing financial contributions.

Based on an assessment of the governance structure and operating procedures of PJMF, the Company determined it has the power to control certain significant activities of PJMF, and therefore, is the primary beneficiary.

1 unchanged sentence

Noncontrolling Interests

Papa John’s has four joint venture arrangements in which there are noncontrolling interests held by third parties that include 188 restaurants at March 27, 2022 and March 28, 2021.

Subsequent to the end of the first quarter, the Company divested its interest in one joint venture that included 90 restaurants.

See Note 10 for additional information.

Papa John’s has joint venture arrangements in which there are noncontrolling interests held by third parties that include 98 and 188 restaurants at June 26, 2022 and June 27, 2021, respectively.

As further described in Note 10, we divested our 51 percent interest in one joint venture that owned 90 -restaurants in the second quarter of 2022.

The assets and liabilities associated with this joint venture arrangement were classified as held for sale at the end of the first quarter of 2022.

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 Condensed Consolidated Statements of Operations of net income attributable to noncontrolling interests.

Net income attributable to these joint ventures for the three months ended March 27, 2022 and March 28, 2021 was as follows (in thousands):

Three Months Ended

Additionally, disclosures are required to clearly identify and distinguish between the interests of the Company and the interests of the noncontrolling owners, including a disclosure on the face of the Condensed Consolidated Statements of Operations of net income attributable to noncontrolling interests.

Net income attributable to these joint ventures for the three and six months ended June 26, 2022 and June 27, 2021 was as follows (in thousands):

Three Months Ended Six Months Ended

2022 June 27,

2021 June 26,

2022 June 27,

Papa John’s International, Inc.

$ 706 $ 2,296 $ 2,327 $ 4,645

Noncontrolling interests 297 1,336 1,230 2,736

1 unchanged sentence

The following summarizes the redemption feature, location and related accounting within the Condensed Consolidated Balance Sheets for these joint venture arrangements:

Type of Joint Venture Arrangement

Location within the Balance Sheets

Recorded Value

Joint 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

Type of Joint Venture Arrangement Location within the Balance Sheets Recorded Value

Joint ventures with no redemption feature Permanent equity Carrying value

Joint ventures with option to require the Company to purchase the noncontrolling interest - not currently redeemable or redemption not probable Temporary equity Carrying value

Deferred Income Tax Accounts and Tax Reserves

22 unchanged sentences

accordingly, the fair values presented do not necessarily indicate what the Company or its debtholders could realize in a current market exchange.

Our financial assets and liabilities that were measured at fair value on a recurring basis as of March 27, 2022 and December 26, 2021 are as follows:

Our financial assets and liabilities that were measured at fair value on a recurring basis as of June 26, 2022 and December 26, 2021 are as follows:

Fair Value Measurements

(in thousands)

March 27, 2022

(in thousands) Carrying

Value Level 1 Level 2 Level 3

June 26, 2022

Financial assets:

Cash surrender value of life insurance policies (a) $ 29,514 $ 29,514 $ — $ —

Financial liabilities:

Interest rate swaps (b) $ 672 $ — $ 672 $ —

4 unchanged sentences

Interest rate swaps (b) $ 5,536 $ — $ 5,536 $ —

_______________

(a) Represents life insurance policies held in our non-qualified deferred compensation plan.

4 unchanged sentences

The Company’s revolving credit facilities under its credit agreement approximate carrying value due to its variable market-based interest rate.

The Company’s 3.875 %senior notes are classified as a Level 2 fair value measurement since the Company estimates the fair value by using recent trading transactions, and has the following estimated fair values and carrying values (excluding the impact of unamortized debt issuance costs) as of March 27, 2022 and December 26, 2021, respectively:

March 27, 2022

December 26, 2021

(in thousands)

The Company’s 3.875 % senior notes are classified as a Level 2 fair value measurement since the Company estimates the fair value by using recent trading transactions, and has the following estimated fair values and carrying values (excluding the impact of unamortized debt issuance costs) as of June 26, 2022 and December 26, 2021, respectively:

June 26, 2022 December 26, 2021

(in thousands) Carrying

Value Carrying

3.875 % Senior Notes

$ 400,000 $ 332,000 $ 400,000 $ 396,000

Allowance for Credit Losses

3 unchanged sentences

The following table summarizes changes in our allowances for credit losses for accounts receivable and notes receivable:

(in thousands)

Accounts Receivable

Notes Receivable

(in thousands) Accounts Receivable Notes Receivable

Balance at December 26, 2021 $ 2,364 $ 1,500

2 unchanged sentences

Recoveries collected — ( 14 )

Balance at March 27, 2022

(1) The Company recorded $ 14.6 million of one -time, non-cash reserves for certain accounts receivable and notes receivable primarily associated with a master franchisee with operations principally in Russia.

Balance at June 26, 2022 $ 5,108 $ 14,020

(1) The Company recorded $ 14.6 million of one-time, non-cash reserves in the first quarter of 2022 for certain accounts receivable and notes receivable primarily associated with a master franchisee with operations principally in Russia.

Lessor Operating Leases

We sublease certain retail space to our franchisees in the United Kingdom which are primarily operating leases.

At March 27, 2022, we leased and subleased approximately 430 Papa John’s restaurant properties to franchisees in the United Kingdom.

At June 26, 2022, we leased and subleased approximately 436 Papa John’s restaurant properties to franchisees in the United Kingdom.

The initial lease terms on the franchised sites in the United Kingdom are generally 15 years.

1 unchanged sentence

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.

We recognized total sublease income of $ 3.0 million and $ 2.8 million within Other revenues in the Condensed Consolidated Statements of Operations for the three months ended March 27, 2022 and March 28, 2021, respectively.

We recognized total sublease income of $ 3.0 million and $ 6.0 million for the three and six months ended June 26, 2022, respectively, and $ 3.3 million and $ 6.1 million for the three and six months ended June 27, 2021, respectively, within Other revenues in the Condensed Consolidated Statements of Operations.

Lease Guarantees

1 unchanged sentence

These leases have varying terms, the latest of which expires in 2036.

As of March 27, 2022, the estimated maximum amount of undiscounted payments the Company could be required to make in the event of nonpayment by the primary lessees was $ 10.8 million.

As of June 26, 2022, the estimated maximum amount of undiscounted payments the Company could be required to make in the event of nonpayment by the primary lessees was $ 10.2 million.

This contingent liability is not included in the Condensed Consolidated Balance Sheet as it is not probable to occur.

The fair value of the guarantee is not material.

Subsequent to quarter-end, we refranchised 90 Company-owned restaurants held in a consolidated joint venture in Texas through the sale of our 51 % ownership in the joint venture, as discussed in Note 10.

As part of this transaction, we are contingently liable for payment of 12 of the 90 domestic leases, and the estimated maximum amount of undiscounted payments the Company could be required to make in the event of nonpayment by the primary lessees for these stores is approximately $ 1.6 million.

Supplemental Cash Flow & Other Information

Supplemental cash flow information related to leases for the periods reported is as follows:

Three Months Ended

(in thousands)

March 27, 2022

March 28, 2021

Six Months Ended

(in thousands) June 26, 2022 June 27, 2021

Cash paid for amounts included in the measurement of lease liabilities:

6 unchanged sentences

(a) Included within the change in Other assets and liabilities within the Condensed Consolidated Statements of Cash Flows offset by non-cash operating lease right-of-use asset amortization and lease liability accretion.

(b) Includes right-of-use assets of approximately $ 14.5 million for the three months ended March 28, 2021 associated with the lease commencement of our Atlanta, Georgia corporate office.

(b) Includes right-of-use assets of approximately $ 14.3 million for the six months ended June 27, 2021 associated with the lease commencement of our Atlanta, Georgia corporate office.

Papa John’s Marketing Fund, Inc.

2 unchanged sentences

Assets and liabilities of PJMF, which are restricted in their use, included in the Condensed Consolidated Balance Sheets were as follows (in thousands):

2022 December 26, 2021

Current assets:

5 unchanged sentences

Deferred income taxes 592 614

Total assets $ 33,057 $ 41,263

Current liabilities:

9 unchanged sentences

Our contract liabilities primarily relate to franchise fees, unredeemed gift card liabilities, and loyalty program obligations, which we classify as Deferred revenue on the Condensed Consolidated Balance Sheets.

During the three months ended March 27, 2022 and March 28, 2021, the Company recognized $ 9.3 million and $ 9.1 million in revenue, respectively, related to deferred revenue.

During the three and six months ended June 26, 2022, the Company recognized $ 8.3 million and $ 17.6 million in revenue, respectively, related to deferred revenue, compared to $ 9.0 million and $ 18.2 million for the three and six months ended June 27, 2021.

The following table includes a breakout of contract liability balances (in thousands):

Contract Liabilities

March 27, 2022

December 26, 2021

June 26, 2022 December.

26, 2021 Change

Franchise fees and unredeemed gift card liabilities $ 30,306 $ 20,410 $ 9,896

3 unchanged sentences

Equipment incentives are related to the future value of commissary revenue the Company will receive over the term of the incentive agreement.

As of March 27, 2022 and December 26, 2021, the contract assets were approximately $ 5.6 million and $ 5.8 million, respectively.

For both of the three months ended March 27, 2022 and March 28, 2021, revenue was reduced approximately $ 0.8 million for the amortization of contract assets over the applicable contract terms.

As of June 26, 2022 and December 26, 2021, the contract assets were approximately $ 7.4 million and $ 5.8 million, respectively.

For the three and six months ended June 26, 2022, revenue was reduced approximately $ 1.1 million and $ 1.9 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 Condensed Consolidated Balance Sheets.

2 unchanged sentences

Performance Obligations by Period

Less than 1 Year

Less than 1 Year 1-2 Years 2-3 Years 3-4 Years 4-5 Years Thereafter Total

Franchise fees $ 3,198 $ 2,989 $ 2,811 $ 2,604 $ 2,324 $ 7,888 $ 21,814

3 unchanged sentences

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.

The Company applies the practical expedient in ASC 606, " Revenue Recognition " and does not disclose information about remaining performance obligations that have original expected durations of one year or less.

Shares Authorized and Outstanding

The Company has authorized 5.0 million shares of preferred stock (of which none were issued or outstanding at March 27, 2022 and December 26, 2021) and 100.0 million shares of common stock as of March 27, 2022 and December 26, 2021.

There were 35.7 million shares of common stock outstanding, net of repurchased shares of common stock at March 27, 2022, compared to 35.8 million shares at December 26, 2021.

The Company has authorized 5.0 million shares of preferred stock (of which none were issued or outstanding at June 26, 2022 and December 26, 2021) and 100.0 million shares of common stock as of June 26, 2022 and December 26, 2021.

There were 35.2 million shares of common stock outstanding, net of repurchased shares of common stock at June 26, 2022, compared to 35.8 million shares at December 26, 2021.

Share Repurchase Program

On October 28, 2021, our Board of Directors approved a share repurchase program with an indefinite duration for up to $ 425.0 million of the Company’s common stock.

This share repurchase program operated alongside our previous $ 75.0 million share repurchase authorization, which began on November 4, 2020 and expired on December 26, 2021.

The following table summarizes our repurchase activity for the three months ended March 27, 2022 and March 28, 2021:

Maximum Dollar

This share repurchase program operated alongside our previous $ 75.0

million share repurchase authorization, which began on November 4, 2020 and expired on December 26, 2021.

The following table summarizes our repurchase activity under our share repurchase programs for the three and six months ended June 26, 2022 and June 27, 2021:

(in thousands, except average price per share) Total

Purchased Average

Share Aggregate

Purchased Maximum Dollar

Value of Shares

that May Yet Be

(in thousands, except average price per share)

Purchased Under the

Plans or Programs

Three Months Ended

June 26, 2022 452 $ 94.56 $ 42,762 $ 349,329

June 27, 2021 68 $ 101.21 $ 6,921 $ 64,110

(in thousands, except average price per share) Total

Purchased Average

Share Aggregate

Purchased Maximum Dollar

Value of Shares

that May Yet Be

Purchased Under the

Plans or Programs

March 27, 2022

March 28, 2021

Subsequent to March 27, 2022, we acquired an additional 223,000 shares at an aggregate cost of $ 23.0 million and an average price of $ 102.97 per share.

Approximately $ 369.1 million remained available under the Company’s share repurchase program as of April 29, 2022.

Six Months Ended

June 26, 2022 753 $ 100.23 $ 75,471 $ 349,329

June 27, 2021 83 $ 98.23 $ 8,188 $ 64,110

Subsequent to June 26, 2022, we acquired an additional 229,000 shares at an aggregate cost of $ 19.5 million and an average price of $ 85.15 per share.

Approximately $ 329.8 million remained available under the Company’s share repurchase program as of July 29, 2022.

The timing and volume of share repurchases under the Company’s share repurchase programs 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.

2 unchanged sentences

Funding for the share repurchase programs will be provided through our credit facility, operating cash flow, stock option exercises and cash and cash equivalents.

The Company recorded dividends of approximately $ 12.6 million ($ 0.35 per share) in the first quarter of 2022.

On April 26, 2022, our Board of Directors declared a second quarter dividend of $ 0.35 per common share (approximately $ 12.6 million in the aggregate), which will be paid on May 27, 2022 to stockholders of record as of the close of business on May 16, 2022.

The Company recorded dividends of approximately $ 25.1 million ($ 0.70 per share) for the six months ended June 26, 2022.

On August 2, 2022, our Board of Directors declared a second quarter dividend of $ 0.42 per common share (approximately $ 14.9 million in the aggregate), which will be paid on August 26, 2022 to stockholders of record as of the close of business on August 15, 2022.

The declaration and payment of any future dividends will be at the discretion of our Board of Directors.

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The calculations of basic and diluted earnings per common share are as follows:

Three Months Ended

Basic earnings per common share (in thousands, except per share data)

Three Months Ended Six Months Ended

2022 June 27,

2021 June 26,

2022 June 27,

Basic earnings (loss) per common share (in thousands, except per share data)

Net income attributable to the Company $ 25,433 $ 32,254 $ 35,927 $ 66,137

Dividends on redemption of Series B Convertible Preferred Stock — ( 109,852 ) — ( 109,852 )

Dividends paid to participating securities ( 82 ) ( 2,300 ) ( 141 ) ( 5,827 )

Net income attributable to participating securities ( 111 ) — ( 93 ) —

Net income attributable to common shareholders

Net income (loss) attributable to common shareholders $ 25,240 $ ( 79,898 ) $ 35,693 $ ( 49,542 )

Basic weighted average common shares outstanding 35,624 34,729 35,775 33,739

Basic earnings per common share

Diluted earnings per common share (in thousands, except per share data)

Net income attributable to common shareholders

Basic earnings (loss) per common share $ 0.71 $ ( 2.30 ) $ 1.00 $ ( 1.47 )

Diluted earnings (loss) per common share (in thousands, except per share data)

Net income (loss) attributable to common shareholders $ 25,240 $ ( 79,898 ) $ 35,693 $ ( 49,542 )

Weighted average common shares outstanding 35,624 34,729 35,775 33,739

Dilutive effect of outstanding equity awards (a) 200 — 257 —

Diluted weighted average common shares outstanding (b)

Diluted earnings per common share

(a) Excludes 21,000 and 18,000 equity awards for the three months ended March 27, 2022 and March 28, 2021, respectively, as the effect of including such awards would have been anti-dilutive.

(b) The Company had 252,500 shares of Series B Preferred Stock outstanding at March 28, 2021 ( no ne at March 27, 2022).

For the fully diluted calculation, the Series B Preferred stock dividends were added back to net income 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 for March 28, 2021.

This calculation was anti-dilutive and as such was excluded.

Diluted weighted average common shares outstanding 35,824 34,729 36,032 33,739

Diluted earnings (loss) per common share $ 0.70 $ ( 2.30 ) $ 0.99 $ ( 1.47 )

_______________

(a) Excludes 63 and 42 equity awards for the three and six months ended June 26, 2022, respectively, as the effect of including such awards would have been anti-dilutive ( none for the three and six months ended June 27, 2021).

Long-term debt, net, consists of the following (in thousands):

2022 December 26,

Senior notes $ 400,000 $ 400,000

Revolving facilities 145,000 90,000

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At any time prior to September 15, 2024, the Company may also redeem up to 40 % of the Notes with net cash proceeds of certain equity offerings at a redemption price equal to 103.875 % of the principal amount of the Notes to be redeemed, plus accrued and unpaid interest, excluding the redemption date.

In addition, at any time prior to September 15, 2024, the Company may redeem the Notes, in whole or in part, at a redemption price equal to 100 % of the principal amount of the Notes to be redeemed, plus accrued and unpaid interest and an applicable “make-whole” premium.

In addition, at any time prior to September 15, 2024, the Company may

redeem the Notes, in whole or in part, at a redemption price equal to 100 % of the principal amount of the Notes to be redeemed, plus accrued and unpaid interest and an applicable “make-whole” premium.

The Notes also contain customary redemption provisions related to asset sales and certain change of control transactions.

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The PJI Revolving Facility will mature on September 14, 2026.

The remaining availability under the PJI Revolving Facility was approximately $ 455.0 million as of June 26, 2022.

Up to $ 50.0 million of the PJI Revolving Facility may be advanced in certain agreed foreign currencies, including Euros, Pounds Sterling, Canadian Dollars, Japanese Yen, and Mexican Pesos.

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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”).

An unused commitment fee ranging from 18 to 30 basis points per annum, determined according to the Leverage Ratio, applies to the unutilized commitments under the PJI Revolving Facility.

An unused commitment fee ranging from 18 to 30 basis points per annum, determined according to the Leverage Ratio, applies to the underutilized commitments under the PJI Revolving Facility.

Loans outstanding under the PJI Revolving Facility 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.

The Amended Credit Agreement also contain provisions specifying alternative interest rate calculations to be used at such time as LIBOR ceases to be available as a benchmark for establishing the interest rate on floating interest rate borrowings.

The Amended Credit Agreement contains customary affirmative and negative covenants that, among other things, require customary reporting obligations, and restrict, subject to certain exceptions, the incurrence of additional indebtedness and liens, the consummation of certain mergers, consolidations, sales of assets and similar transactions, the making of investments, equity distributions and other restricted payments, and transactions with affiliates.

In addition, the Company will be subject to the following financial covenants:

The Amended Credit Agreement contains customary affirmative and negative covenants that, among other things, require customary reporting obligations, and restrict, subject to certain exceptions, the occurrence of additional indebtedness and liens, the consummation of certain mergers, consolidations, sales of assets and similar transactions, the making of investments, equity distributions and other restricted payments, and transactions with affiliates.

The Company is also subject to the following financial covenants:

(1) a maximum Leverage Ratio of 5.25 to 1.00, subject to the Company’s election to increase the maximum Leverage Ratio by 0.50 to 1.00 in connection with material acquisitions if the Company satisfies certain requirements, and (2) a minimum interest coverage ratio defined as EBITDA plus consolidated rental expense to consolidated interest expense plus consolidated rental expense of 2.00 to 1.00.

We were in compliance with these financial covenants at March 27, 2022.

We were in compliance with these financial covenants at June 26, 2022.

Obligations under the Amended Credit Agreement are guaranteed by certain direct and indirect material domestic subsidiaries of the Company (the “Guarantors”) and are secured by a security interest in substantially all of the capital stock and equity interests of the Company’s and the Guarantors’ domestic and first tier material foreign subsidiaries.

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The PJMF Revolving Facility matures on September 30, 2022.

The borrowings under the PJMF Revolving Facility accrue interest at a variable rate of the one-month LIBOR plus 1.75 % .

There was no debt outstanding under the PJMF Revolving Facility as of March 27, 2022 or December 26, 2021.

The borrowings

under the PJMF Revolving Facility accrue interest at a variable rate of the one-month LIBOR plus 1.75 %.

There was no debt outstanding under the PJMF Revolving Facility as of June 26, 2022 or December 26, 2021.

The PJMF operating results and the related debt outstanding do not impact the financial covenants under the Amended Credit Agreement.

Derivative Financial Instruments

As of March 26, 2022, we have the following interest rate swap agreements with a total notional value of $ 350.0 million:

Effective Dates

Floating Rate Debt

April 30, 2018 through April 30, 2023

January 30, 2018 through August 30, 2022

As of June 26, 2022, 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 %

Our interest rate swaps were de-designated as cash flow hedges following the issuance of the Notes.

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Interest Rate Swap Derivatives

Balance Sheet Location

Balance Sheet Location Fair Value

2022 Fair Value

Other current and long-term assets $ 672 $ —

Other current and long-term liabilities $ — $ 5,536

The effect of derivative instruments on the accompanying condensed consolidated financial statements is as follows (in thousands):

Location of (Loss)

Amount of (Loss)

Derivatives -

Amount of Gain or

Total Net Interest Expense

Relationships Amount of Gain or

(Loss) Recognized

on Derivative Location of (Loss)

Reclassified from

Income Amount of (Loss)

Reclassified from

Income Total Net Interest Expense

Consolidated Statements

Relationships

on Derivative

of Operations

Interest rate swaps for the three months ended:

March 27, 2022

Interest expense

March 28, 2021

Interest expense

Interest paid, including payments made or received under the swaps, was $ 10.1 million and $ 3.4 million for the three months ended March 27, 2022 and March 28, 2021, respectively.

June 26, 2022 $ 1,445 Interest expense $ ( 735 ) $ ( 6,081 )

June 27, 2021 $ 1,399 Interest expense $ ( 1,730 ) $ ( 3,649 )

Interest rate swaps for the six months ended:

June 26, 2022 $ 2,763 Interest Expense $ ( 200 ) $ ( 10,344 )

June 27, 2021 $ 2,781 Interest Expense $ ( 3,439 ) $ ( 7,296 )

Interest paid, including payments made or received under the swaps, was $ 2.4 million and $ 3.6 million for the three months ended June 26, 2022 and June 27, 2021, respectively, and $ 12.6 million and $ 7.1 million for the six months ended June 26, 2022 and June 27, 2021, respectively.

Commitments and Contingencies

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Pursuant to the terms of the proposed settlement, in exchange for the Company’s payment of a total aggregate settlement amount of $ 5.0 million and other non-monetary consideration, all claims in the action will be dismissed, the litigation will be terminated, and the Company will receive a release.

The settlement amount was recorded in General and Administrative expenses in the Condensed Consolidated Statements of Operations in the first quarter of 2022.

The proposed settlement is subject to approval by the District Court and contains certain customary contingencies.

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Durling et al v.

Papa John’s International, Inc.

, is a conditionally certified collective action filed in May 2016 in the United States District Court for the Southern District of New York, alleging that corporate restaurant delivery drivers were not properly reimbursed for vehicle mileage and expenses in accordance with the Fair Labor Standards Act.

Papa John’s International, Inc ., is a conditionally certified collective action filed in May 2016 in the United States District Court for the Southern District of New York, alleging that corporate restaurant delivery drivers were not properly reimbursed for vehicle mileage and expenses in accordance with the Fair Labor Standards Act.

In July 2018, the District Court granted a motion to certify a conditional corporate collective class and the opt-in notice process has been completed.

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The Company continues to deny any liability or wrongdoing in this matter and intends to vigorously defend this action.

The Company has no t recorded any liability related to this lawsuit as of March 27, 2022 as it does not believe a loss is probable or reasonably estimable.

Divestitures and Impairment

Assets and Liabilities Held for Sale

The Company has not recorded any liability related to this lawsuit as of June 26, 2022 as it does not believe a loss is probable or reasonably estimable.

Refranchising Loss

On March 28, 2022, we refranchised our 51 % ownership interest in a 90 -restaurant consolidated joint venture in Texas for $ 14.0 million, net of transaction costs.

The assets and liabilities associated with the joint venture are classified as held for sale in the Condensed Consolidated Balance Sheet as of March 27, 2022.

March 27, 2022

Current assets

Property and equipment, net

Operating lease right-of-use assets

Loss on impairment

Total assets held for sale

Accounts payable, taxes payable, accrued expenses and other

Current deferred revenue

Current operating lease liabilities

Long-term operating lease liabilities

Other long-term liabilities

Total liabilities held for sale

Upon reclassification of assets and liabilities held for sale, we recorded a one-time, non-cash charge of $ 8.4 million which reflects net sale proceeds of $ 14.0 million, the noncontrolling interest of $ 4.2 million, and the recognition of an unearned royalty stream of $ 12.2 million to be recognized as revenue over the 10-year term of the franchise agreement executed concurrent with the disposition in accordance with ASC 810, “ Consolidation.” The impairment was recorded in the first quarter of 2022 and realized upon consummation of the sale in the second quarter.

In connection with the divestiture, we recorded a one-time, non-cash charge of $ 8.4 million as a Refranchising Loss in the Condensed Consolidated Statement of Operations, which reflects net sale proceeds of $ 14.0 million, the noncontrolling interest of $ 4.2 million, and the recognition of an unearned royalty stream of $ 12.2 million to be recognized as revenue over the 10 -year term of the franchise agreement executed concurrent with the disposition in accordance with ASC 810, “ Consolidation .” The $ 8.4 million of the one-time, non-cash refranchising loss was recorded in the first quarter of 2022 and realized upon consummation of the sale in the second quarter.

Impairment of Reacquired Master Franchise Rights

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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 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.

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Our segment information is as follows:

Three Months Ended

(In thousands)

Three Months Ended Six Months Ended

(In thousands) June 26,

2022 June 27,

2021 June 26,

2022 June 27,

Domestic Company-owned restaurants $ 171,411 $ 196,124 $ 370,176 $ 393,358

2 unchanged sentences

International 39,282 46,277 81,989 88,881

All others 57,672 53,491 114,945 107,806

Total revenues $ 522,665 $ 515,008 $ 1,065,357 $ 1,026,754

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North America commissaries 52,754 53,428 111,261 105,498

All others 15,889 18,943 35,268 38,091

Total intersegment revenues $ 69,691 $ 73,412 $ 148,630 $ 145,690

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International (2) 7,306 8,683 11,761 17,047

All others 2,187 4,894 5,906 11,012

Unallocated corporate expenses (3) ( 19,344 ) ( 24,617 ) ( 56,454 ) ( 47,779 )

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International 15,157

All others 118,496

Unallocated corporate assets 240,431

1 unchanged sentence

Total property and equipment, net $ 225,382

(1) Includes a one-time, non-cash charge of $ 8.4 million associated with the refranchising of the Company’s ownership interest in a 90 -restaurant joint venture, recorded as Refranchising and impairment loss.

See Note 10 for additional information.

(2) Includes $ 3.5 million of one-time, non-cash reserves for certain accounts receivable and impairments of reacquired franchise rights in the first quarter of 2022.

(2) Includes $ 3.5 million of one-time, non-cash reserves for certain accounts receivable and impairments of reacquired franchise rights for the six months ended June 26, 2022.

See Notes 2 and 10 for additional information.

(3) For the first quarter of 2022, Unallocated corporate expenses include $ 13.9 million of one-time, non-cash reserves of certain notes receivable and $ 5.0 million for the Legal Settlement.

For the first quarter of 2021, Unallocated corporate expense includes $ 3.9 million of reorganization costs.

(3) Unallocated corporate expenses include $ 13.9 million of one-time, non-cash reserves of certain notes receivable, $ 5.0 million for the Legal Settlement, and $ 1.5 million of advisory fees and severance costs associated with the transition of certain executives for the six months ended June 26, 2022.

Unallocated corporate expense includes $ 3.3 million and $ 7.2 million of reorganization costs for the three and six months ended June 27, 2021.

See Notes 2 and 9 for additional information.

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Reportable Segments

Three Months Ended March 27, 2022

Major Products/Services Lines

Domestic Company-owned restaurants

North America franchising

North America commissaries

International

Three Months Ended June 26, 2022

Major Products/Services Lines Domestic Company-owned restaurants North America franchising North America commissaries International All others Total

Company-owned restaurant sales $ 171,411 $ — $ — $ — $ — $ 171,411

2 unchanged sentences

Other revenues — — — 7,324 73,561 80,885

Eliminations — ( 1,048 ) ( 52,754 ) — ( 15,889 ) ( 69,691 )

Total segment revenues $ 171,411 $ 34,917 $ 219,383 $ 39,282 $ 57,672 $ 522,665

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Reportable Segments

Three Months Ended March 28, 2021

Major Products/Services Lines

Domestic Company-owned restaurants

North America franchising

North America commissaries

International

Three Months Ended June 27, 2021

Major Products/Services Lines Domestic Company-owned restaurants North America franchising North America commissaries International All others Total

Company-owned restaurant sales $ 196,124 $ — $ — $ — $ — $ 196,124

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Other revenues — — — 8,663 72,434 81,097

Eliminations — ( 1,041 ) ( 53,428 ) — ( 18,943 ) ( 73,412 )

Total segment revenues $ 196,124 $ 32,475 $ 186,641 $ 46,277 $ 53,491 $ 515,008

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Total revenues $ 196,124 $ 32,475 $ 186,641 $ 37,614 $ 62,154 $ 515,008

(1) Other revenues as reported in the Condensed Consolidated Statements of Operations include $ 8.1 million and $ 8.0 million of revenue for the three months ended March 27, 2022 and March 28, 2021, respectively, that are part of the international reporting segment.

Reportable Segments

Six Months Ended June 26, 2022

Major Products/Services Lines Domestic Company-owned restaurants North America franchising North America commissaries International All others Total

Company-owned restaurant sales $ 370,176 $ — $ — $ — $ — $ 370,176

Franchise royalties and fees — 71,286 — 25,478 — 96,764

Commissary sales — — 540,323 41,097 — 581,420

Other revenues — — — 15,414 150,213 165,627

Eliminations — ( 2,101 ) ( 111,261 ) — ( 35,268 ) ( 148,630 )

Total segment revenues $ 370,176 $ 69,185 $ 429,062 $ 81,989 $ 114,945 $ 1,065,357

International other revenues (1) — — — ( 15,414 ) 15,414 —

Total revenues $ 370,176 $ 69,185 $ 429,062 $ 66,575 $ 130,359 $ 1,065,357

Reportable Segments

Six Months Ended June 27, 2021

Major Products/Services Lines Domestic Company-owned restaurants North America franchising North America commissaries International All others Total

Company-owned restaurant sales $ 393,358 $ — $ — $ — $ — $ 393,358

Franchise royalties and fees — 67,291 — 25,364 — 92,655

Commissary sales — — 477,017 46,857 — 523,874

Other revenues — — — 16,660 145,897 162,557

Eliminations — ( 2,101 ) ( 105,498 ) — ( 38,091 ) ( 145,690 )

Total segment revenues $ 393,358 $ 65,190 $ 371,519 $ 88,881 $ 107,806 $ 1,026,754

International other revenues (1) — — — ( 16,660 ) 16,660 —

Total revenues $ 393,358 $ 65,190 $ 371,519 $ 72,221 $ 124,466 $ 1,026,754

(1) Other revenues as reported in the Condensed Consolidated Statements of Operations include $ 7.3 million and $ 15.4 million of revenue for the three and six months ended June 26, 2022, respectively, and $ 8.7 million and $ 16.7 million for the three and six months ended June 27, 2021, 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 operating income but must be reported on a gross basis under accounting requirements.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements