Papa Johns 2010 Annual Report Download - page 91

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84
15. Commitments and Contingencies (continued)
Future gross lease costs, future expected sublease payments and net lease costs as of December 26, 2010,
are as follows (in thousands):
Future
Expected
Gross Lease Sublease Net Lease
Year Costs Payments Costs
2011 27,792$ 3,259$ 24,533$
2012 24,689 3,165 21,524
2013 20,049 2,936 17,113
2014 15,922 2,726 13,196
2015 11,268 2,426 8,842
Thereafter 23,883 12,292 11,591
Total 123,603$ 26,804$ 96,799$
We subleased certain sites to our Papa John’s franchisees located in the United Kingdom in 2010, 2009
and 2008 and received payments of $3.1 million, $2.9 million and $3.0 million, respectively, which are
netted with international operating expenses.
In addition, as a condition of the sale of our former Perfect Pizza operations in the United Kingdom in
March 2006, we remain contingently liable for payment under approximately 56 lease arrangements,
primarily associated with Perfect Pizza restaurant sites for which the Perfect Pizza franchisor is primarily
liable. The leases have varying terms, the latest of which expires in 2017. As of December 26, 2010, the
potential amount of undiscounted payments we could be required to make in the event of non-payment by
the new owner of Perfect Pizza and associated franchisees was $4.3 million. We have not recorded a
liability with respect to such leases at December 26, 2010 or December 27, 2009, as our cross-default
provisions with the Perfect Pizza franchisor significantly reduce the risk that we will be required to make
payments under these leases.
The Company’s headquarters facility is leased under a capital lease arrangement with the City of
Jeffersontown, Kentucky in connection with the issuance of $80.2 million in Industrial Revenue Bonds.
The bonds are held 100% by the Company and, accordingly, the bond obligation and investment and
related interest income and expense are eliminated in the consolidated financial statements.
We are 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.