Papa Johns 2006 Annual Report Download - page 51

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under the lease. We believe these cross-default provisions significantly reduce the risk that we will be
required to make payments under these leases. Accordingly, we have not recorded any liability with
respect to such leases at December 31, 2006.
We have certain other commercial commitments where payment is contingent upon the occurrence of
certain events. Such commitments include the following by year (in thousands):
Less than 1-3 3-5 After
1 Year Years Years 5 Years Total
Other Commercial Commitments:
Standby letters of credit 38,078$ -$ -$ -$ 38,078$
Amount of Commitment Expiration Per Period
See “Notes 9, 12 and 17” of “Notes to Consolidated Financial Statements” for additional information
related to contractual and other commitments.
The contractual obligations above exclude the debt, operating leases and other commercial commitments
associated with VIEs. The third-party creditors and landlords of the VIEs do not have any recourse to
Papa John’s.
Impact of Inflation
We do not believe inflation has materially affected earnings during the past three years. Substantial
increases in costs, particularly commodities, labor, benefits, insurance, utilities and fuel, could have a
significant impact on us in the future.
Forward-Looking Statements
Certain information contained in this annual report, particularly information regarding future financial
performance and plans and objectives of management, is forward-looking. Certain factors could cause
actual results to differ materially from those expressed in forward-looking statements. These factors
include, but are not limited to: the uncertainties associated with litigation; changes in pricing or other
marketing or promotional strategies by competitors, which may adversely affect sales; new product and
concept developments by food industry competitors; the ability of the Company and its franchisees to
meet planned growth targets and operate new and existing restaurants profitably; increases in or
sustained high cost levels of food, paper, utilities, fuel, employee compensation and benefits, insurance
and similar costs; the ability to obtain ingredients from alternative suppliers, if needed; health- or
disease-related disruptions or consumer concerns about commodities supplies; the selection and
availability of suitable restaurant locations; negotiation of suitable lease or financing terms; constraints
on permitting and construction of restaurants; local governmental agencies’ restrictions on the sale of
certain food products; higher-than-anticipated construction costs; the hiring, training and retention of
management and other personnel; changes in consumer taste, demographic trends, traffic patterns and the
type, number and location of competing restaurants; franchisee relations; federal and state laws
governing such matters as wages, benefits, working conditions, citizenship requirements and overtime,
including pending legislation to increase the federal minimum wage; and labor shortages in various
markets resulting in higher required wage rates. The above factors might be especially harmful to the
financial viability of franchisees or Company-owned operations in under-penetrated or emerging markets,
leading to greater unit closings than anticipated. Increases in projected claims losses for the Company’s