Papa Johns 2001 Annual Report Download - page 21

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We own approximately five acres in Orlando on which our 63,000 square foot full-service commissary is
located, and eight acres in Dallas on which our 77,500 square foot full-service commissary is located. In
addition, the Company owns approximately 72 acres in Louisville, Kentucky with a 42,000 square foot
building housing our printing operations and a 247,000 square foot building, approximately 30% to 40%
of which accommodates the Louisville QC Center operation and promotional division. The remainder of
the building houses our corporate offices.
The Papa John’s UK management team is located in 6,000 square feet of leased office space in London
with a remaining lease term of 14 years. Papa John’s UK owns a distribution center located in a 30,000
square foot facility that will be converted to a full-service commissary during 2002.
Item 3. Legal Proceedings
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 pre-tax charges, which is included in the $20.9
million of special charges recorded in 2000 related to this issue. No costs related to this issue were
incurred during 2001. See “Note 4” of “Notes to Consolidated Financial Statements” for additional
information.
We are also subject to claims and legal actions in the ordinary course of our 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.
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable.