1. Papa John’s Pizza Update

2. Introduction Papa John’s is a relatively small growth company that fits the investment policy statement like a glove. The company has a superior product and more focused strategy than its competition. The company has been reporting positive financial results since its inception, yet is currently undervalued.

3. Recent Stock Info Last Trade:$26.06 52 Week High:$44.5 52 Week Low:$19 P/E Ratio:15.59 Beta:.95 Market Cap:$630.8M Purchase Price$26.56

4. Background Papa John’s has operations in 47 states, the District of Columbia, and five international markets such as Mexico and Puerto Rico. At present, there were 2,345 Papa John’s restaurants in operation; of these, 573 were company owned. Through the acquisition of Perfect Pizza Holdings Limited in the U.K., Papa John’s increased its international presence by an additional 206 stores, 12 of which are company owned.

5. How Papa John’s Makes Money Roughly 50% of all Papa John’s revenue comes from sales of menu items at company owned restaurants. About 6% of revenues come from franchise royalties, franchise fees, and development fees. 40% of Papa John’s revenues come through commissary sales to both company and franchised stores. The remaining revenues come from equipment and other sales.

6. The Secret to Their Success Papa John’s has experienced phenomenal success by doing what they do best: Making Pizza. The only items Papa John’s offers on its menu are pizza, bread sticks and cheese sticks. The company prides itself on the use of only the finest ingredients including fresh dough (not frozen), 100% real cheese, and canned, vine-ripened tomato sauce (not concentrate). The company only offers carry-out and delivery service, allowing the focus of each store to be solely concentrated on making their products.

7. Pizza Hut…. REJECTED!!! On August 12, 1998, Papa John’s was sued by its largest competitor, Pizza Hut, Inc. Pizza Hut claimed that the slogan “Better Ingredients. Better Pizza.” constitutes false and deceptive advertising, a violation of the Lanham Trademark Act. Pizza Hut lost the suit in September.

8. Where Does the Papa Go From Here? Papa John’s is a growth company, and it plans on living up to its classification. The company plans to open 35 more company restaurants this year and acquire from 60 from existing franchisees. Additionally, the company expects franchisees to open nearly 375 restaurants new restaurants this year.

9. Domestic market expansion is planned for the upper Northeast Coast, West Coast and Rocky Mountain regions. The company also plans on further penetration of existing markets in the U.S. Internationally, Papa John’s is focused on Mexico, Puerto Rico, Venezuela, Costa Rica, Guatemala, Saudi Arabia, Canada, Iceland and the United Kingdom. Regarding expansion in the U.K., restaurants may be opened under the name of either Papa John’s or Perfect Pizza, but within three years all of the Perfect Pizzas will converted to Papa John’s stores.

10. Change in Debt Structure Broad approved 225 million dollars for stock repurchase program Went from virtually 0 long term debt to 119 million dollars Bank loan with 3 year collar between LIBOR + 85 basis and prime We are not concerned because the company has over 80 million dollars in FCF

11. Balance Sheet Assets

12. Balance Sheet L & OE

13. DCF Conservative long term 8% growth rate Pro forma income statements Updated WACC to include new debt structure Value of firm per share of $40.85