Delaware
(State or Other Jurisdiction of
Incorporation or Organization)
|
|
27-2349094
(IRS Employer
Identification No.)
|
8000 NE Parkway Drive, Suite 350
Vancouver, WA
(Address of principal executive offices)
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98662
(Zip Code)
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Large accelerated filer [ ]
|
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Accelerated filer [X]
|
Non-accelerated filer [ ]
|
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Smaller reporting company [ ]
|
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Papa Murphy’s Holdings, Inc. and Subsidiaries
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
(In thousands, except share and per share data)
|
September 26, 2016
|
|
September 28, 2015
|
|
September 26, 2016
|
|
September 28, 2015
|
||||||||
Revenues
|
|
|
|
|
|
|
|
||||||||
Franchise royalties
|
$
|
8,834
|
|
|
$
|
9,124
|
|
|
$
|
28,868
|
|
|
$
|
29,557
|
|
Franchise and development fees
|
645
|
|
|
1,123
|
|
|
2,173
|
|
|
3,092
|
|
||||
Company-owned store sales
|
18,705
|
|
|
17,604
|
|
|
58,849
|
|
|
52,927
|
|
||||
Other
|
335
|
|
|
281
|
|
|
1,507
|
|
|
845
|
|
||||
Total revenues
|
28,519
|
|
|
28,132
|
|
|
91,397
|
|
|
86,421
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Costs and Expenses
|
|
|
|
|
|
|
|
||||||||
Store operating costs:
|
|
|
|
|
|
|
|
||||||||
Cost of food and packaging
|
6,488
|
|
|
6,409
|
|
|
20,541
|
|
|
18,942
|
|
||||
Compensation and benefits
|
5,748
|
|
|
4,918
|
|
|
17,058
|
|
|
13,994
|
|
||||
Advertising
|
1,727
|
|
|
1,806
|
|
|
5,790
|
|
|
5,227
|
|
||||
Occupancy
|
1,608
|
|
|
1,210
|
|
|
4,487
|
|
|
3,386
|
|
||||
Other store operating costs
|
2,762
|
|
|
2,061
|
|
|
7,608
|
|
|
5,362
|
|
||||
Selling, general, and administrative
|
6,198
|
|
|
6,038
|
|
|
21,165
|
|
|
21,083
|
|
||||
Depreciation and amortization
|
3,137
|
|
|
2,641
|
|
|
8,767
|
|
|
7,380
|
|
||||
Loss on disposal/impairment of property and equipment
|
160
|
|
|
4
|
|
|
155
|
|
|
66
|
|
||||
Total costs and expenses
|
27,828
|
|
|
25,087
|
|
|
85,571
|
|
|
75,440
|
|
||||
Operating Income
|
691
|
|
|
3,045
|
|
|
5,826
|
|
|
10,981
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Interest expense, net
|
1,201
|
|
|
1,133
|
|
|
3,587
|
|
|
3,406
|
|
||||
Loss on impairment of investments
|
—
|
|
|
—
|
|
|
—
|
|
|
4,500
|
|
||||
Other expense, net
|
41
|
|
|
44
|
|
|
125
|
|
|
90
|
|
||||
(Loss) Income Before Income Taxes
|
(551
|
)
|
|
1,868
|
|
|
2,114
|
|
|
2,985
|
|
||||
|
|
|
|
|
|
|
|
||||||||
(Benefit from) provision for income taxes
|
(130
|
)
|
|
746
|
|
|
941
|
|
|
1,206
|
|
||||
Net (Loss) Income
|
(421
|
)
|
|
1,122
|
|
|
1,173
|
|
|
1,779
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Net loss attributable to noncontrolling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
500
|
|
||||
Net (Loss) Income Attributable to Papa Murphy’s
|
$
|
(421
|
)
|
|
$
|
1,122
|
|
|
$
|
1,173
|
|
|
$
|
2,279
|
|
|
|
|
|
|
|
|
|
||||||||
(Loss) earnings per share of common stock
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
(0.03
|
)
|
|
$
|
0.07
|
|
|
$
|
0.07
|
|
|
$
|
0.14
|
|
Diluted
|
$
|
(0.03
|
)
|
|
$
|
0.07
|
|
|
$
|
0.07
|
|
|
$
|
0.13
|
|
Weighted average common stock outstanding
|
|
|
|
|
|
|
|
||||||||
Basic
|
16,753,292
|
|
|
16,672,327
|
|
|
16,738,151
|
|
|
16,635,400
|
|
||||
Diluted
|
16,753,292
|
|
|
16,919,504
|
|
|
16,772,627
|
|
|
16,893,575
|
|
Papa Murphy’s Holdings, Inc. and Subsidiaries
|
(In thousands, except par value and share data)
|
September 26, 2016
|
|
December 28, 2015
|
||||
ASSETS
|
|
|
|
||||
Current Assets
|
|
|
|
||||
Cash and cash equivalents
|
$
|
508
|
|
|
$
|
6,867
|
|
Accounts receivable, net
|
3,816
|
|
|
4,944
|
|
||
Current portion of notes receivable
|
88
|
|
|
78
|
|
||
Inventories
|
964
|
|
|
868
|
|
||
Prepaid expenses and other current assets
|
5,087
|
|
|
6,139
|
|
||
Total current assets
|
10,463
|
|
|
18,896
|
|
||
Property and equipment, net
|
29,878
|
|
|
21,261
|
|
||
Notes receivable, net of current portion
|
76
|
|
|
143
|
|
||
Goodwill
|
108,462
|
|
|
106,506
|
|
||
Trade name and trademarks
|
87,002
|
|
|
87,002
|
|
||
Definite-life intangibles, net
|
37,614
|
|
|
41,366
|
|
||
Other assets
|
407
|
|
|
297
|
|
||
Total assets
|
$
|
273,902
|
|
|
$
|
275,471
|
|
|
|
|
|
||||
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
||||
Current Liabilities
|
|
|
|
||||
Accounts payable
|
$
|
6,023
|
|
|
$
|
9,798
|
|
Accrued expenses and other current liabilities
|
7,118
|
|
|
9,756
|
|
||
Current portion of unearned franchise and development fees
|
1,481
|
|
|
1,795
|
|
||
Current portion of long-term debt
|
5,079
|
|
|
2,800
|
|
||
Total current liabilities
|
19,701
|
|
|
24,149
|
|
||
Long-term debt, net of current portion
|
106,977
|
|
|
108,237
|
|
||
Unearned franchise and development fees, net of current portion
|
515
|
|
|
540
|
|
||
Deferred tax liability
|
43,243
|
|
|
42,439
|
|
||
Other long-term liabilities
|
3,683
|
|
|
2,450
|
|
||
Total liabilities
|
174,119
|
|
|
177,815
|
|
||
Commitments and contingencies (Note 14)
|
|
|
|
|
|
||
|
|
|
|
||||
Stockholders’ Equity
|
|
|
|
||||
Preferred stock ($0.01 par value; 15,000,000 shares authorized; no shares issued)
|
—
|
|
|
—
|
|
||
Common stock ($0.01 par value; 200,000,000 shares authorized; 16,952,970 and 16,949,720 shares issued, respectively)
|
170
|
|
|
169
|
|
||
Additional paid-in capital
|
119,695
|
|
|
118,842
|
|
||
Stock subscriptions receivable
|
—
|
|
|
(100
|
)
|
||
Accumulated deficit
|
(20,082
|
)
|
|
(21,255
|
)
|
||
Total stockholders’ equity
|
99,783
|
|
|
97,656
|
|
||
Total liabilities and stockholders’ equity
|
$
|
273,902
|
|
|
$
|
275,471
|
|
Papa Murphy’s Holdings, Inc. and Subsidiaries
|
|
Nine Months Ended
|
||||||
(In thousands)
|
September 26, 2016
|
|
September 28, 2015
|
||||
Operating Activities
|
|
|
|
||||
Net income
|
$
|
1,173
|
|
|
$
|
1,779
|
|
Net loss attributable to noncontrolling interests
|
—
|
|
|
500
|
|
||
Net income attributable to Papa Murphy’s
|
1,173
|
|
|
2,279
|
|
||
Adjustments to reconcile to cash from operating activities
|
|
|
|
||||
Depreciation and amortization
|
8,767
|
|
|
7,380
|
|
||
Loss on disposal/impairment of property and equipment
|
155
|
|
|
66
|
|
||
Non-cash employee equity compensation
|
660
|
|
|
858
|
|
||
Loss on impairment of cost-method investment
|
—
|
|
|
4,000
|
|
||
Other non-cash items
|
240
|
|
|
566
|
|
||
Change in operating assets and liabilities
|
|
|
|
||||
Accounts receivable
|
992
|
|
|
2,652
|
|
||
Prepaid expenses and other assets
|
824
|
|
|
(133
|
)
|
||
Unearned franchise and development fees
|
(339
|
)
|
|
(847
|
)
|
||
Accounts payable
|
(2,120
|
)
|
|
2,360
|
|
||
Accrued expenses and other liabilities
|
(1,841
|
)
|
|
(212
|
)
|
||
Deferred taxes
|
789
|
|
|
(1,032
|
)
|
||
Net cash from operating activities
|
9,300
|
|
|
17,937
|
|
||
|
|
|
|
||||
Investing Activities
|
|
|
|
||||
Acquisition of property and equipment
|
(14,485
|
)
|
|
(5,502
|
)
|
||
Acquisition of stores, less cash acquired
|
(2,455
|
)
|
|
(9,524
|
)
|
||
Proceeds from sale of stores
|
136
|
|
|
—
|
|
||
Issuance of notes receivable
|
—
|
|
|
(250
|
)
|
||
Payments received on notes receivable
|
57
|
|
|
49
|
|
||
Investment in cost-method investee
|
—
|
|
|
(500
|
)
|
||
Net cash from investing activities
|
(16,747
|
)
|
|
(15,727
|
)
|
||
|
|
|
|
||||
Financing Activities
|
|
|
|
||||
Payments on long-term debt
|
(3,321
|
)
|
|
(2,100
|
)
|
||
Advances on revolver, net
|
4,100
|
|
|
—
|
|
||
Repurchases of common stock
|
(84
|
)
|
|
(10
|
)
|
||
Proceeds from exercise of stock options
|
293
|
|
|
271
|
|
||
Payments received on subscription receivables
|
100
|
|
|
—
|
|
||
Investment by noncontrolling interest holders
|
—
|
|
|
56
|
|
||
Net cash from financing activities
|
1,088
|
|
|
(1,783
|
)
|
||
|
|
|
|
||||
Net change in cash and cash equivalents
|
(6,359
|
)
|
|
427
|
|
||
Cash and Cash Equivalents, beginning of year
|
6,867
|
|
|
5,056
|
|
||
Cash and Cash Equivalents, end of period
|
$
|
508
|
|
|
$
|
5,483
|
|
|
|
|
|
||||
Supplemental Disclosures of Cash Flow Information
|
|
|
|
||||
Cash paid during the period for interest
|
$
|
3,423
|
|
|
$
|
2,516
|
|
Cash paid during the period for income taxes
|
138
|
|
|
2,178
|
|
||
Noncash Supplemental Disclosures of Investing and Financing Activities
|
|
|
|
||||
Acquisition of property and equipment in accounts payable
|
$
|
1,438
|
|
|
$
|
3,206
|
|
Papa Murphy’s Holdings, Inc. and Subsidiaries
|
Note 1 — Description of Business and Basis of Presentation
|
(in thousands)
|
As Filed
|
|
Updated
|
||||
Additional paid-in capital
|
$
|
118,801
|
|
|
$
|
118,842
|
|
Accumulated deficit
|
(21,214
|
)
|
|
(21,255
|
)
|
Note 2 — Acquisitions
|
Cash and cash equivalents
|
$
|
4
|
|
Inventory
|
23
|
|
|
Prepaid expenses and other current assets
|
22
|
|
|
Property and equipment
|
503
|
|
|
Asset retirement obligations
|
(59
|
)
|
|
Total identifiable net assets acquired
|
493
|
|
|
Goodwill
|
1,956
|
|
|
Total net assets acquired
|
2,449
|
|
|
Dispute settlement
|
500
|
|
|
Total consideration
|
$
|
2,949
|
|
Note 3 — Prepaid Expenses and Other Current Assets
|
(in thousands)
|
September 26, 2016
|
|
December 28, 2015
|
||||
Prepaid media production costs
|
$
|
44
|
|
|
$
|
352
|
|
Prepaid software and services
|
840
|
|
|
464
|
|
||
Prepaid rents
|
615
|
|
|
477
|
|
||
Prepaid insurance
|
126
|
|
|
602
|
|
||
Taxes receivable
|
2,858
|
|
|
2,872
|
|
||
POS software licenses for resale
|
—
|
|
|
660
|
|
||
Assets held for sale
|
333
|
|
|
605
|
|
||
Advertising cooperative assets, restricted
|
201
|
|
|
26
|
|
||
Other
|
70
|
|
|
81
|
|
||
Total prepaid expenses and other current assets
|
$
|
5,087
|
|
|
$
|
6,139
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
(in thousands)
|
September 26, 2016
|
|
September 28, 2015
|
|
September 26, 2016
|
|
September 28, 2015
|
||||||||
POS software license revenue
|
$
|
—
|
|
|
$
|
258
|
|
|
$
|
657
|
|
|
$
|
559
|
|
Note 4 — Property and Equipment
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
(in thousands)
|
September 26, 2016
|
|
September 28, 2015
|
|
September 26, 2016
|
|
September 28, 2015
|
||||||||
Depreciation expense
|
$
|
1,907
|
|
|
$
|
1,288
|
|
|
$
|
5,015
|
|
|
$
|
3,367
|
|
Note 5 — Goodwill
|
(in thousands)
|
Domestic
Company Stores
|
|
Domestic
Franchise
|
|
Total
|
||||||
Balance at December 28, 2015
|
$
|
24,960
|
|
|
$
|
81,546
|
|
|
$
|
106,506
|
|
Acquisitions
|
1,956
|
|
|
—
|
|
|
1,956
|
|
|||
Balance at September 26, 2016
|
$
|
26,916
|
|
|
$
|
81,546
|
|
|
$
|
108,462
|
|
Note 6 — Intangible Assets
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
(in thousands)
|
September 26, 2016
|
|
September 28, 2015
|
|
September 26, 2016
|
|
September 28, 2015
|
||||||||
Amortization expense
|
$
|
1,230
|
|
|
$
|
1,353
|
|
|
$
|
3,752
|
|
|
$
|
4,013
|
|
Note 7 — Receivables
|
(in thousands)
|
September 26, 2016
|
|
December 28, 2015
|
||||
Allowance for doubtful accounts
|
$
|
36
|
|
|
$
|
31
|
|
Note 8 — Financing Arrangements
|
(in thousands)
|
September 26, 2016
|
|
December 28, 2015
|
||||
Term loan
|
$
|
105,879
|
|
|
$
|
109,200
|
|
Revolving line of credit
|
4,100
|
|
|
—
|
|
||
Notes payable
|
3,000
|
|
|
3,000
|
|
||
Total principal amount of long-term debt
|
112,979
|
|
|
112,200
|
|
||
Unamortized debt issuance costs
|
(923
|
)
|
|
(1,163
|
)
|
||
Total long-term debt
|
112,056
|
|
|
111,037
|
|
||
Less current portion
|
(5,079
|
)
|
|
(2,800
|
)
|
||
Total long-term debt, net of current portion
|
$
|
106,977
|
|
|
$
|
108,237
|
|
Note 9 — Fair Value Measurement
|
▪
|
Level 1 — Quoted prices in active markets for identical assets or liabilities that the entity has the ability to access.
|
▪
|
Level 2 — Observable inputs other than prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated with observable market data.
|
▪
|
Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets and liabilities. This includes certain pricing models, discounted cash flow methodologies, and similar techniques that use significant unobservable inputs.
|
|
September 26, 2016
|
|
December 28, 2015
|
|
|
||||||||||||
(in thousands)
|
Carrying Value
|
|
Fair Value
|
|
Carrying Value
|
|
Fair Value
|
|
Fair Value Measurement
|
||||||||
Financial assets
|
|
|
|
|
|
|
|
|
|
||||||||
Notes receivable
(1)
|
$
|
164
|
|
|
$
|
165
|
|
|
$
|
221
|
|
|
$
|
224
|
|
|
Level 3
|
(1)
|
The fair value of notes receivable was estimated primarily using a discounted cash flow method based on a discount rate, reflecting the applicable credit spread.
|
Note 10 — Accrued Expenses and Other Current Liabilities
|
(in thousands)
|
September 26, 2016
|
|
December 28, 2015
|
||||
Accrued compensation and related costs
|
$
|
2,301
|
|
|
$
|
3,699
|
|
Gift cards payable
|
2,171
|
|
|
2,902
|
|
||
Accrued interest and non-income taxes payable
|
682
|
|
|
855
|
|
||
Convention fund balance
|
993
|
|
|
626
|
|
||
Unearned product rebates
|
162
|
|
|
922
|
|
||
Advertising cooperative liabilities
|
309
|
|
|
137
|
|
||
Other
|
500
|
|
|
615
|
|
||
Total accrued expenses and other current liabilities
|
$
|
7,118
|
|
|
$
|
9,756
|
|
Note 11 — Income Taxes
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
(in thousands)
|
September 26, 2016
|
|
September 28, 2015
|
|
September 26, 2016
|
|
September 28, 2015
|
||||||||
(Benefit from) provision for income taxes
|
$
|
(130
|
)
|
|
$
|
746
|
|
|
$
|
941
|
|
|
$
|
1,206
|
|
(Loss) income before income taxes
|
(551
|
)
|
|
1,868
|
|
|
2,114
|
|
|
2,985
|
|
||||
Effective income tax rate
|
23.6
|
%
|
|
39.9
|
%
|
|
44.5
|
%
|
|
40.4
|
%
|
Note 12 — Share-based Compensation
|
|
Number of Shares of Restricted Common Stock
|
|
Weighted Average
Sale/Grant Date Fair Value
Per Share
|
||||||
|
Time Vesting
|
|
Performance Vesting
|
|
|||||
Unvested, December 28, 2015
|
49,513
|
|
|
186,515
|
|
|
$
|
3.11
|
|
Granted
|
15,000
|
|
|
—
|
|
|
7.90
|
|
|
Vested
|
(16,628
|
)
|
|
—
|
|
|
11.72
|
|
|
Repurchased
|
(15,387
|
)
|
|
(23,007
|
)
|
|
2.04
|
|
|
Unvested, September 26, 2016
|
32,498
|
|
|
163,508
|
|
|
$
|
2.52
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
(in thousands, except per share amounts)
|
September 26, 2016
|
|
September 28, 2015
|
|
September 26, 2016
|
|
September 28, 2015
|
||||||||
Weighted average grant date fair value per share
|
N/A
|
|
|
$
|
19.41
|
|
|
$
|
7.90
|
|
|
$
|
19.05
|
|
|
Total fair value of shares granted
|
N/A
|
|
|
$
|
60
|
|
|
$
|
119
|
|
|
$
|
150
|
|
|
Total fair value of shares vested
|
$
|
75
|
|
|
$
|
86
|
|
|
$
|
195
|
|
|
$
|
137
|
|
|
Number of Shares
Subject to Options
|
|
Weighted
Average Exercise Price Per Share |
|
Weighted
Average Remaining Contractual Term |
|
Aggregate
Intrinsic Value (thousands) |
||||||||
|
Time Vesting
|
|
Performance Vesting
|
|
|
|
|||||||||
Outstanding, December 28, 2015
|
841,956
|
|
|
200,481
|
|
|
$
|
11.55
|
|
|
|
|
|
||
Granted
|
173,450
|
|
|
—
|
|
|
11.04
|
|
|
|
|
|
|||
Exercised
|
(26,644
|
)
|
|
—
|
|
|
11.00
|
|
|
|
|
|
|||
Forfeited
|
(30,944
|
)
|
|
(17,822
|
)
|
|
11.49
|
|
|
|
|
|
|||
Outstanding, September 26, 2016
|
957,818
|
|
|
182,659
|
|
|
$
|
11.49
|
|
|
8.0 years
|
|
$
|
—
|
|
Exercisable, September 26, 2016
|
508,449
|
|
|
—
|
|
|
$
|
11.38
|
|
|
7.6 years
|
|
$
|
—
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
(in thousands, except per share amounts)
|
September 26, 2016
|
|
September 28, 2015
|
|
September 26, 2016
|
|
September 28, 2015
|
||||||||
Weighted average grant date fair value per share
|
N/A
|
|
|
N/A
|
|
|
$
|
3.70
|
|
|
$
|
5.41
|
|
||
Total fair value of awards granted
|
N/A
|
|
|
N/A
|
|
|
$
|
642
|
|
|
$
|
1,039
|
|
||
Total fair value of awards vested
|
$
|
13
|
|
|
$
|
23
|
|
|
$
|
493
|
|
|
$
|
346
|
|
Total intrinsic value of options exercised
|
N/A
|
|
|
$
|
121
|
|
|
$
|
25
|
|
|
$
|
154
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
(in thousands)
|
September 26, 2016
|
|
September 28, 2015
|
|
September 26, 2016
|
|
September 28, 2015
|
||||||||
Stock compensation expense
|
$
|
233
|
|
|
$
|
202
|
|
|
$
|
660
|
|
|
$
|
858
|
|
Associated income tax benefits
|
$
|
76
|
|
|
$
|
64
|
|
|
$
|
220
|
|
|
$
|
282
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||
|
September 26, 2016
|
|
September 28, 2015
|
|
September 26, 2016
|
|
September 28, 2015
|
Risk free rate
|
N/A
|
|
N/A
|
|
1.8%
|
|
1.9%
|
Expected volatility
|
N/A
|
|
N/A
|
|
30.4%
|
|
37.9%
|
Expected term
|
N/A
|
|
N/A
|
|
6.3 years
|
|
6.3 years
|
Expected dividend yield
|
N/A
|
|
N/A
|
|
0.0%
|
|
0.0%
|
Note 13 — Earnings per Share (EPS)
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
(in thousands, except per share data)
|
September 26, 2016
|
|
September 28, 2015
|
|
September 26, 2016
|
|
September 28, 2015
|
||||||||
Earnings:
|
|
|
|
|
|
|
|
||||||||
Net (loss) income
|
$
|
(421
|
)
|
|
$
|
1,122
|
|
|
$
|
1,173
|
|
|
$
|
1,779
|
|
Less: Net loss attributable to noncontrolling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
500
|
|
||||
Net (loss) income attributable to Papa Murphy’s
|
(421
|
)
|
|
1,122
|
|
|
1,173
|
|
|
2,279
|
|
||||
Shares:
|
|
|
|
|
|
|
|
||||||||
Weighted average common shares outstanding
|
16,753
|
|
|
16,672
|
|
|
16,738
|
|
|
16,635
|
|
||||
Dilutive effect of restricted equity awards
(1)
|
—
|
|
|
247
|
|
|
34
|
|
|
258
|
|
||||
Diluted weighted average number of shares outstanding
|
16,753
|
|
|
16,920
|
|
|
16,773
|
|
|
16,894
|
|
||||
(Loss) earnings per share:
|
|
|
|
|
|
|
|
||||||||
Basic (loss) earnings per share
|
$
|
(0.03
|
)
|
|
$
|
0.07
|
|
|
$
|
0.07
|
|
|
$
|
0.14
|
|
Diluted (loss) earnings per share
|
$
|
(0.03
|
)
|
|
$
|
0.07
|
|
|
$
|
0.07
|
|
|
$
|
0.13
|
|
(1)
|
The Company’s potential common stock instruments such as stock options and restricted stock were not included in the computation of diluted EPS for the three months ended September 26, 2016, as the effect of including these shares in the calculation would have been anti-dilutive.
|
Note 14 — Commitments and Contingencies
|
Note 15 — Related Party Transactions
|
Note 16 — Segment Information
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
(in thousands)
|
September 26, 2016
|
|
September 28, 2015
|
|
September 26, 2016
|
|
September 28, 2015
|
||||||||
Revenues
|
|
|
|
|
|
|
|
||||||||
Domestic Franchise
|
$
|
9,725
|
|
|
$
|
10,445
|
|
|
$
|
32,276
|
|
|
$
|
33,258
|
|
Domestic Company Stores
|
18,705
|
|
|
17,604
|
|
|
58,849
|
|
|
52,927
|
|
||||
International
|
89
|
|
|
83
|
|
|
272
|
|
|
236
|
|
||||
Total
|
$
|
28,519
|
|
|
$
|
28,132
|
|
|
$
|
91,397
|
|
|
$
|
86,421
|
|
Segment Operating Income (Loss)
|
|
|
|
|
|
|
|
||||||||
Domestic Franchise
|
$
|
3,286
|
|
|
$
|
4,901
|
|
|
$
|
11,567
|
|
|
$
|
15,036
|
|
Domestic Company Stores
|
(1,648
|
)
|
|
(516
|
)
|
|
(2,456
|
)
|
|
1,172
|
|
||||
International
|
73
|
|
|
76
|
|
|
199
|
|
|
154
|
|
||||
Corporate and unallocated
|
(1,020
|
)
|
|
(1,416
|
)
|
|
(3,484
|
)
|
|
(5,381
|
)
|
||||
Total
|
$
|
691
|
|
|
$
|
3,045
|
|
|
$
|
5,826
|
|
|
$
|
10,981
|
|
Depreciation and amortization
|
|
|
|
|
|
|
|
||||||||
Domestic Franchise
|
$
|
1,680
|
|
|
$
|
1,416
|
|
|
$
|
4,748
|
|
|
$
|
4,005
|
|
Domestic Company Stores
|
1,449
|
|
|
1,217
|
|
|
3,996
|
|
|
3,352
|
|
||||
International
|
8
|
|
|
8
|
|
|
23
|
|
|
23
|
|
||||
Total
|
$
|
3,137
|
|
|
$
|
2,641
|
|
|
$
|
8,767
|
|
|
$
|
7,380
|
|
(in thousands)
|
September 26, 2016
|
|
December 28, 2015
|
||||
Total Assets
|
|
|
|
||||
Domestic Franchise
|
$
|
131,157
|
|
|
$
|
139,705
|
|
Domestic Company Stores
|
52,479
|
|
|
45,217
|
|
||
International
|
380
|
|
|
438
|
|
||
Other
(1)
|
89,886
|
|
|
90,111
|
|
||
Total
|
$
|
273,902
|
|
|
$
|
275,471
|
|
(1)
|
Other assets which are not allocated to the individual segments primarily include trade names and trademarks and taxes receivable.
|
2016 Highlights
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||
|
September 26, 2016
|
|
September 28, 2015
|
|
September 26, 2016
|
|
September 28, 2015
|
||||
Domestic Franchise
|
(5.6
|
)%
|
|
1.5
|
%
|
|
(4.0
|
)%
|
|
3.9
|
%
|
Domestic Company Stores
|
(7.7
|
)%
|
|
0.0
|
%
|
|
(5.6
|
)%
|
|
3.7
|
%
|
Total domestic stores
|
(5.8
|
)%
|
|
1.4
|
%
|
|
(4.1
|
)%
|
|
3.9
|
%
|
Our Segments
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
(in thousands)
|
September 26, 2016
|
|
September 28, 2015
|
|
September 26, 2016
|
|
September 28, 2015
|
||||||||
Revenues
|
|
|
|
|
|
|
|
||||||||
Domestic Franchise
|
$
|
9,725
|
|
|
$
|
10,445
|
|
|
$
|
32,276
|
|
|
$
|
33,258
|
|
Domestic Company Stores
|
18,705
|
|
|
17,604
|
|
|
58,849
|
|
|
52,927
|
|
||||
International
|
89
|
|
|
83
|
|
|
272
|
|
|
236
|
|
||||
Total
|
$
|
28,519
|
|
|
$
|
28,132
|
|
|
$
|
91,397
|
|
|
$
|
86,421
|
|
Segment Operating Income (Loss)
|
|
|
|
|
|
|
|
||||||||
Domestic Franchise
|
$
|
3,286
|
|
|
$
|
4,901
|
|
|
$
|
11,567
|
|
|
$
|
15,036
|
|
Domestic Company Stores
|
(1,648
|
)
|
|
(516
|
)
|
|
(2,456
|
)
|
|
1,172
|
|
||||
International
|
73
|
|
|
76
|
|
|
199
|
|
|
154
|
|
||||
Corporate and unallocated
|
(1,020
|
)
|
|
(1,416
|
)
|
|
(3,484
|
)
|
|
(5,381
|
)
|
||||
Total
|
$
|
691
|
|
|
$
|
3,045
|
|
|
$
|
5,826
|
|
|
$
|
10,981
|
|
Depreciation and amortization
|
|
|
|
|
|
|
|
||||||||
Domestic Franchise
|
$
|
1,680
|
|
|
$
|
1,416
|
|
|
$
|
4,748
|
|
|
$
|
4,005
|
|
Domestic Company Stores
|
1,449
|
|
|
1,217
|
|
|
3,996
|
|
|
3,352
|
|
||||
International
|
8
|
|
|
8
|
|
|
23
|
|
|
23
|
|
||||
Total
|
$
|
3,137
|
|
|
$
|
2,641
|
|
|
$
|
8,767
|
|
|
$
|
7,380
|
|
Key Operating Metrics
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 26, 2016
|
|
September 28, 2015
|
|
September 26, 2016
|
|
September 28, 2015
|
||||||||
Domestic store average weekly sales
|
$
|
9,819
|
|
|
$
|
10,568
|
|
|
$
|
10,829
|
|
|
$
|
11,431
|
|
Domestic comparable store sales
|
(5.8
|
)%
|
|
1.4
|
%
|
|
(4.1
|
)%
|
|
3.9
|
%
|
||||
Domestic comparable stores
|
1,418
|
|
|
1,366
|
|
|
1,418
|
|
|
1,366
|
|
||||
System-wide sales (in thousands)
|
$
|
199,318
|
|
|
$
|
203,078
|
|
|
$
|
651,422
|
|
|
$
|
653,462
|
|
System-wide stores
|
1,582
|
|
|
1,500
|
|
|
1,582
|
|
|
1,500
|
|
||||
Adjusted EBITDA (in thousands)
|
$
|
4,812
|
|
|
$
|
6,144
|
|
|
$
|
17,011
|
|
|
$
|
20,591
|
|
|
Domestic Company Stores
|
|
Domestic Franchise
|
|
Total Domestic
|
|
International
|
|
Total
|
|||||
Store count at December 28, 2015
|
127
|
|
|
1,369
|
|
|
1,496
|
|
|
40
|
|
|
1,536
|
|
Openings
|
30
|
|
|
47
|
|
|
77
|
|
|
4
|
|
|
81
|
|
Closings
|
—
|
|
|
(32
|
)
|
|
(32
|
)
|
|
(3
|
)
|
|
(35
|
)
|
Net transfers
(1)
|
9
|
|
|
(9
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
Store count at September 26, 2016
|
166
|
|
|
1,375
|
|
|
1,541
|
|
|
41
|
|
|
1,582
|
|
(1)
|
Net transfers are the number of franchised stores acquired by the Company, less the number of Company-owned stores refranchised.
|
▪
|
all non-cash losses or expenses (including non-cash share-based compensation expenses and the non-cash portion of rent expenses relating to the difference between
GAAP
and cash rent expenses), excluding any non-cash loss or expense that is an accrual of a reserve for a cash expenditure or payment to be made, or anticipated to be made, in a future period;
|
▪
|
non-cash gains and losses on disposal or impairment of property and equipment;
|
▪
|
non-recurring or unusual cash fees, costs, charges, losses, and expenses;
|
▪
|
fees, costs, and expenses related to acquisitions; and
|
▪
|
pre-opening costs with respect to new Company-owned stores.
|
▪
|
in comparing our operating performance on a consistent basis;
|
▪
|
to calculate incentive compensation for our employees;
|
▪
|
for planning purposes, including the preparation of our internal annual operating budget; and
|
▪
|
to evaluate the performance and effectiveness of our operational strategies.
|
▪
|
Adjusted EBITDA
does not reflect the significant interest expense, or the cash requirements necessary to service interest or principal payments, on our debt;
|
▪
|
Adjusted EBITDA
excludes pre-opening costs and non-cash GAAP rent expense with respect to new Company-owned stores, which we will continue to incur in the future as we open new stores consistent with our growth strategy;
|
▪
|
although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and
Adjusted EBITDA
does not reflect the cash requirements for such replacements; and
|
▪
|
Adjusted EBITDA
does not reflect our tax expense or the cash requirements to pay our taxes.
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
(in thousands)
|
September 26, 2016
|
|
September 28, 2015
|
|
September 26, 2016
|
|
September 28, 2015
|
||||||||
Net (Loss) Income
|
$
|
(421
|
)
|
|
$
|
1,122
|
|
|
$
|
1,173
|
|
|
$
|
1,779
|
|
Net loss attributable to noncontrolling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
500
|
|
||||
Net (Loss) Income Attributable to Papa Murphy’s
|
(421
|
)
|
|
1,122
|
|
|
1,173
|
|
|
2,279
|
|
||||
Depreciation and amortization
|
3,137
|
|
|
2,641
|
|
|
8,767
|
|
|
7,380
|
|
||||
(Benefit from) provision for income taxes
|
(130
|
)
|
|
746
|
|
|
941
|
|
|
1,206
|
|
||||
Interest expense, net
|
1,201
|
|
|
1,133
|
|
|
3,587
|
|
|
3,406
|
|
||||
EBITDA
|
3,787
|
|
|
5,642
|
|
|
14,468
|
|
|
14,271
|
|
||||
Loss on disposal of property and equipment
(1)
|
160
|
|
|
4
|
|
|
155
|
|
|
66
|
|
||||
Expenses not indicative of future operations:
|
|
|
|
|
|
|
|
||||||||
Secondary offering costs
(2)
|
—
|
|
|
—
|
|
|
—
|
|
|
345
|
|
||||
Loss on Project Pie impairment and disposal
(3)
|
—
|
|
|
—
|
|
|
—
|
|
|
4,325
|
|
||||
Transaction costs
(4)
|
—
|
|
|
1
|
|
|
—
|
|
|
64
|
|
||||
New store pre-opening expenses
(5)
|
450
|
|
|
218
|
|
|
1,216
|
|
|
464
|
|
||||
Non-cash expenses and non-income based state taxes
(6)
|
415
|
|
|
279
|
|
|
1,172
|
|
|
1,056
|
|
||||
Adjusted EBITDA
|
$
|
4,812
|
|
|
$
|
6,144
|
|
|
$
|
17,011
|
|
|
$
|
20,591
|
|
(1)
|
Represents non-cash gains and losses resulting from disposal of property and equipment, including divested Company-owned stores.
|
(2)
|
Represents offering costs related to the secondary offering of the Company's common stock.
|
(3)
|
Represents a $4 million loss recognized upon impairment of Project Pie, a cost-method investment, and its subsequent disposal, and the write-off as bad debt receivables totaling $325,000.
|
(4)
|
Represents transaction costs relating to the acquisition of multiple franchised stores.
|
(5)
|
Represents expenses directly associated with the opening of new Company-owned stores and incurred primarily in advance of the store opening, including wages, benefits, and travel for training of opening teams, grand opening marketing costs, and other store operating costs.
|
(6)
|
Represents (i) non-cash expenses related to equity-based compensation; (ii) non-cash expenses related to the difference between
GAAP
and cash rent expense; and (iii) state revenue taxes levied in lieu of an income tax.
|
Results of Operations
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||||||||||||||
|
September 26, 2016
|
|
September 28, 2015
|
|
September 26, 2016
|
|
September 28, 2015
|
||||||||||||||||||||
(in thousands)
|
$
|
|
Total
% of
Revenues
|
|
$
|
|
Total
% of Revenues |
|
$
|
|
Total
% of Revenues |
|
$
|
|
Total
% of Revenues |
||||||||||||
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Franchise royalties
|
$
|
8,834
|
|
|
30.9
|
%
|
|
$
|
9,124
|
|
|
32.4
|
%
|
|
$
|
28,868
|
|
|
31.6
|
%
|
|
$
|
29,557
|
|
|
34.2
|
%
|
Franchise and development fees
|
645
|
|
|
2.3
|
%
|
|
1,123
|
|
|
4.0
|
%
|
|
2,173
|
|
|
2.4
|
%
|
|
3,092
|
|
|
3.6
|
%
|
||||
Company-owned store sales
|
18,705
|
|
|
65.6
|
%
|
|
17,604
|
|
|
62.6
|
%
|
|
58,849
|
|
|
64.4
|
%
|
|
52,927
|
|
|
61.2
|
%
|
||||
Other
|
335
|
|
|
1.2
|
%
|
|
281
|
|
|
1.0
|
%
|
|
1,507
|
|
|
1.6
|
%
|
|
845
|
|
|
1.0
|
%
|
||||
Total revenues
|
28,519
|
|
|
100.0
|
%
|
|
28,132
|
|
|
100.0
|
%
|
|
91,397
|
|
|
100.0
|
%
|
|
86,421
|
|
|
100.0
|
%
|
||||
Costs and Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Store operating costs:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Cost of food and packaging
(1)
|
6,488
|
|
|
22.7
|
%
|
|
6,409
|
|
|
22.8
|
%
|
|
20,541
|
|
|
22.5
|
%
|
|
18,942
|
|
|
21.9
|
%
|
||||
Compensation and benefits
(1)
|
5,748
|
|
|
20.2
|
%
|
|
4,918
|
|
|
17.5
|
%
|
|
17,058
|
|
|
18.7
|
%
|
|
13,994
|
|
|
16.2
|
%
|
||||
Advertising
(1)
|
1,727
|
|
|
6.1
|
%
|
|
1,806
|
|
|
6.4
|
%
|
|
5,790
|
|
|
6.3
|
%
|
|
5,227
|
|
|
6.0
|
%
|
||||
Occupancy
(1)
|
1,608
|
|
|
5.6
|
%
|
|
1,210
|
|
|
4.3
|
%
|
|
4,487
|
|
|
4.9
|
%
|
|
3,386
|
|
|
3.9
|
%
|
||||
Other store operating costs
(1)
|
2,762
|
|
|
9.7
|
%
|
|
2,061
|
|
|
7.3
|
%
|
|
7,608
|
|
|
8.3
|
%
|
|
5,362
|
|
|
6.2
|
%
|
||||
Selling, general, and administrative
|
6,198
|
|
|
21.7
|
%
|
|
6,038
|
|
|
21.5
|
%
|
|
21,165
|
|
|
23.2
|
%
|
|
21,083
|
|
|
24.4
|
%
|
||||
Depreciation and amortization
|
3,137
|
|
|
11.0
|
%
|
|
2,641
|
|
|
9.4
|
%
|
|
8,767
|
|
|
9.6
|
%
|
|
7,380
|
|
|
8.5
|
%
|
||||
Loss on disposal/impairment of property and equipment
|
160
|
|
|
0.6
|
%
|
|
4
|
|
|
—
|
%
|
|
155
|
|
|
0.2
|
%
|
|
66
|
|
|
0.1
|
%
|
||||
Total costs and expenses
|
27,828
|
|
|
97.6
|
%
|
|
25,087
|
|
|
89.2
|
%
|
|
85,571
|
|
|
93.6
|
%
|
|
75,440
|
|
|
87.3
|
%
|
||||
Operating Income
|
691
|
|
|
2.4
|
%
|
|
3,045
|
|
|
10.8
|
%
|
|
5,826
|
|
|
6.4
|
%
|
|
10,981
|
|
|
12.7
|
%
|
||||
Interest expense, net
|
1,201
|
|
|
4.2
|
%
|
|
1,133
|
|
|
4.0
|
%
|
|
3,587
|
|
|
3.9
|
%
|
|
3,406
|
|
|
3.9
|
%
|
||||
Loss on impairment of investments
|
—
|
|
|
—
|
%
|
|
—
|
|
|
—
|
%
|
|
—
|
|
|
—
|
%
|
|
4,500
|
|
|
5.2
|
%
|
||||
Other expense, net
|
41
|
|
|
0.1
|
%
|
|
44
|
|
|
0.2
|
%
|
|
125
|
|
|
0.1
|
%
|
|
90
|
|
|
0.1
|
%
|
||||
(Loss) Income Before Income Taxes
|
(551
|
)
|
|
(1.9
|
)%
|
|
1,868
|
|
|
6.6
|
%
|
|
2,114
|
|
|
2.3
|
%
|
|
2,985
|
|
|
3.5
|
%
|
||||
(Benefit from) provision for income taxes
|
(130
|
)
|
|
(0.5
|
)%
|
|
746
|
|
|
2.7
|
%
|
|
941
|
|
|
1.0
|
%
|
|
1,206
|
|
|
1.4
|
%
|
||||
Net (Loss) Income
|
(421
|
)
|
|
(1.5
|
)%
|
|
1,122
|
|
|
4.0
|
%
|
|
1,173
|
|
|
1.3
|
%
|
|
1,779
|
|
|
2.1
|
%
|
||||
Net loss attributable to noncontrolling interests
|
—
|
|
|
—
|
%
|
|
—
|
|
|
—
|
%
|
|
—
|
|
|
—
|
%
|
|
500
|
|
|
0.6
|
%
|
||||
Net (Loss) Income Attributable to Papa Murphy’s
|
$
|
(421
|
)
|
|
(1.5
|
)%
|
|
$
|
1,122
|
|
|
4.0
|
%
|
|
$
|
1,173
|
|
|
1.3
|
%
|
|
$
|
2,279
|
|
|
2.6
|
%
|
(1)
|
Please see the table presented in
Costs and Expenses
below, which presents Company-owned store expenses as a percentage of Company-owned store revenue for the
three and nine
months ended
September 26, 2016
, and
September 28, 2015
.
|
▪
|
Compensation and benefits
.
As we open or acquire stores in less developed markets with lower average sales volumes, we realize lower efficiencies in labor due to minimum labor demands for a store, regardless of volume. As we invest in these new stores and develop the markets, we expect sales to grow and
Compensation and benefits
to approach that of our broader portfolio of stores. Compensation and benefits have also been impacted by the significant growth in new Company-owned stores, since labor costs for newly opened stores typically approach our portfolio average 12-18 months after a store is opened.
|
▪
|
Other store operating costs.
New store opening costs of
$450,000
and
$1,216,000
were recognized in
Other store operating costs
for the
three and nine
months ended
September 26, 2016
, respectively, compared to
$218,000
and
$464,000
in the
three and nine
months ended
September 28, 2015
, respectively. Opening costs have historically averaged around $40,000 per store with the majority of the costs incurred within two months of the store opening. In the nine months ended
September 26, 2016
, the Company opened
30
new stores, with more nearing completion. Excluding the impact of pre-opening costs in 2016,
Other store operating costs
as a percentage of
Company-owned store sales
would have been
12.4%
and
10.9%
for the
three and nine
months ended
September 26, 2016
, respectively.
|
▪
|
Company-owned store portfolio changes.
We acquired
32
stores from franchise owners, opened
48
new stores, closed
one
store, and refranchised
four
stores since
December 29, 2014
. Most of the stores acquired and all of the new stores opened have sales volumes currently lower than the average store sales for the rest of our portfolio.
|
Liquidity and Capital Resources
|
|
Nine Months Ended
|
||||||
(in thousands)
|
September 26, 2016
|
|
September 28, 2015
|
||||
Cash flows from operating activities
|
$
|
9,300
|
|
|
$
|
17,937
|
|
Cash flows from investing activities
|
(16,747
|
)
|
|
(15,727
|
)
|
||
Cash flows from financing activities
|
1,088
|
|
|
(1,783
|
)
|
||
Total cash flows
|
$
|
(6,359
|
)
|
|
$
|
427
|
|
Critical Accounting Policies
|
Commodity Price Risk
|
Interest Rate Risk
|
Foreign Currency Exchange Rate Risk
|
Evaluation of Disclosure Controls and Procedures
|
Changes in Internal Control over Financial Reporting
|
|
Total Number of Shares Purchased
|
|
Average Price Paid per Share
|
|
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
|
|
Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs
|
||||
June 28, 2016, to July 31, 2016
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
N/A
|
August 1 to August 31, 2016
|
678
|
|
(1)
|
4.80
|
|
|
—
|
|
|
N/A
|
|
September 1 to September 26, 2016
|
3,772
|
|
(1)
|
0.19
|
|
|
—
|
|
|
N/A
|
|
Total
|
4,450
|
|
|
$
|
0.89
|
|
|
—
|
|
|
N/A
|
(1)
|
The Company repurchased unvested restricted shares from a former employee whose employment with the Company had terminated. The unvested shares were repurchased by the Company at the historical price paid by the former employee for the unvested shares.
|
Exhibit Number
|
Description of Exhibits
|
10.1*
|
First Amendment to Credit Agreement, dated as of October 31, 2016, among PMI Holdings, Inc., Wells Fargo Bank, National Association, and the other financial institutions party thereto.
|
31.1*
|
Certification of the Chief Executive Officer Pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as amended, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
31.2*
|
Certification of the Chief Financial Officer Pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as amended, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
32.1*
|
Certificate of the Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
32.2*
|
Certificate of the Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
101.INS*
|
XBRL Instance Document
|
101.SCH*
|
XBRL Taxonomy Extension Schema Document
|
101.CAL*
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
101.DEF*
|
XBRL Taxonomy Extension Definition Linkbase Document
|
101.LAB*
|
XBRL Taxonomy Extension Label Linkbase Document
|
101.PRE*
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
PAPA MURPHY’S HOLDINGS, INC.
|
|||
|
|
|
|
By:
|
|
/s/ Mark Hutchens
|
|
|
|
Name:
|
Mark Hutchens
|
|
|
Title:
|
Chief Financial Officer
|
Date of Payment
|
Amount of Term
Loan Payment
|
March 31, 2015
|
$700,000
|
June 29, 2015
|
$700,000
|
September 28, 2015
|
$700,000
|
December 28, 2015
|
$700,000
|
|
|
March 28, 2016
|
$700,000
|
Date of Payment
|
Amount of Term
Loan Payment
|
June 27, 2016
|
$700,000
|
September 26, 2016
|
$1,400,000
|
January 2, 2017
|
$2,100,000
|
|
|
April 3, 2017
|
$2,100,000
|
July 3, 2017
|
$2,100,000
|
October 2, 2017
|
$2,100,000
|
January 1, 2018
|
$2,100,000
|
|
|
April 2, 2018
|
$2,100,000
|
July 2, 2018
|
$2,100,000
|
October 1, 2018
|
$2,100,000
|
December 31, 2018
|
$2,100,000
|
|
|
April 1, 2019
|
$2,100,000
|
July 1, 2019
|
$2,100,000
|
August 28, 2019
|
$83,300,000
|
Date
|
Maximum Leverage Ratio
|
September 29, 2014
|
5.75
|
December 29, 2014
|
5.75
|
March 30, 2015
|
5.75
|
June 29, 2015
|
5.75
|
September 28, 2015
|
5.50
|
Date
|
Maximum Amount
|
April 3, 2017
|
$9,500,000
|
July 3, 2017
|
$7,000,000
|
October 2, 2017
|
$7,000,000
|
January 1, 2018
|
$2,500,000
|
April 2, 2018
|
$2,500,000
|
July 2, 2018
|
$2,500,000
|
October 1, 2018
|
$2,500,000
|
December 31, 2018
|
$2,500,000
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Papa Murphy's Holdings, Inc.;
|
2.
|
Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principals;
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c.
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Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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d.
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Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of the annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5.
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The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
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b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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/s/ Ken Calwell
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|
Ken Calwell
|
|
President and Chief Executive Officer
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|
(Principal Executive Officer)
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1.
|
I have reviewed this quarterly report on Form 10-Q of Papa Murphy's Holdings, Inc.;
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2.
|
Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principals;
|
c.
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of the annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
/s/ Mark Hutchens
|
|
Mark Hutchens
|
|
Chief Financial Officer
|
|
(Principal Financial Officer)
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
|
/s/ Ken Calwell
|
|
Ken Calwell
|
|
Chief Executive Officer
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
|
/s/ Mark Hutchens
|
|
Mark Hutchens
|
|
Chief Financial Officer
|