Papa Johns 2000 Annual Report Download - page 62

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subsequent quarters. We have agreed to provide a $17.6 million loan facility to BIBP to fund cash deficits
that may arise. No amounts were advanced under this facility as of December 31, 2000.
During 2000, we purchased $136.6 million of cheese from BIBP (none in 1999 or 1998).
13. Lease Commitments
We lease office, retail and commissary space under operating leases with terms generally ranging from
three to five years and providing for at least one renewal. Certain leases further provide that the lease
payments may be increased annually based on the Consumer Price Index. We also lease certain
equipment under operating leases with terms ranging from three to seven years. Future minimum lease
payments are as follows: 2001 - $19.1 million; 2002 - $16.8 million; 2003 - $14.6 million; 2004 - $12.1
million; 2005 - $9.1 million and thereafter - $29.5 million. Total rent expense was $14.5 million in 2000,
$12.4 million in 1999, and $11.2 million in 1998.
14. Advertising Litigation
In August 1998, Pizza Hut, Inc. filed suit against us in the United States District Court for the Northern
District of Texas, claiming that our “Better Ingredients. Better Pizza.” slogan constituted false and
deceptive advertising in violation of the Lanham Trademark Act. In November 1999, the jury returned a
verdict that our “Better Ingredients. Better Pizza.” slogan was false and deceptive. On January 3, 2000,
the court announced its judgment, awarding Pizza Hut $468,000 in damages and ordering us to cease all
use of the “Better Ingredients. Better Pizza.” slogan. Under the judge’ s order, we were to cease using the
slogan in print and broadcast advertising, phase out printed promotional materials and other items
containing the slogan and remove the slogan from restaurant signage, all according to deadlines specified
by the court. We initially estimated that the pre-tax costs of complying with the court’ s order and certain
related costs could have approximated $12.0 to $15.0 million, of which $6.1 million was recorded as pre-
tax charges against 1999 earnings. We filed an appeal of the verdict and the court’ s order and a motion
for stay of the court’ s order pending outcome of the appeal.
On January 21, 2000, the United States Court of Appeals for the Fifth Circuit granted a stay of the District
Court judgment pending our appeal. Oral arguments related to the appeal were held on April 5, 2000. On
September 19, 2000, the Fifth Circuit vacated the District Court's judgment in its entirety and remanded
the case to the District Court for entry of judgment in favor of Papa John's. On December 18, 2000, Pizza
Hut filed a Petition for Writ of Certiorari with the United States Supreme Court. On March 19, 2001, the
United States Supreme Court denied Pizza Hut's Petition for Writ of Certiorari. For the 2000 fiscal year,
we incurred an additional $1.0 million of pretax charges related to this issue.
We are also subject to claims and legal actions in the ordinary course of business. We believe that all
such claims and actions currently pending against us are either adequately covered by insurance or would
not have a material adverse effect on us if decided in a manner unfavorable to us.
15. Share Repurchase and Common Equity Put Options
The Papa John’ s Board of Directors has authorized the repurchase of up to $275.0 million of common
stock under a share repurchase program that began December 9, 1999, and runs through December 30,
2001. Funding for the share repurchase program is provided through a $200.0 million credit facility,
operating cash flows and the liquidation of available investments, cash and cash equivalents.