Papa Johns 2007 Annual Report Download - page 61

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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 26,878$ -$ -$ -$ 26,878$
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.
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; general economic
conditions; increases in or sustained high cost levels of food ingredients and other commodities, 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; the possibility of impairment charges if PJUK or recently acquired
restaurants perform below our expectations; our PJUK operations remain contingently liable for payment
under 74 lease arrangements with a total value of $10.3 million associated with the sold Perfect Pizza
operations; federal and state laws governing such matters as wages, benefits, working conditions,
citizenship requirements and overtime, including legislation to further increase the federal and state
minimum wage; and labor shortages in various markets resulting in higher required wage rates. In recent
months, the credit markets have experienced instability. Our franchisees may experience difficulty in
obtaining adequate financing and thus our growth strategy and franchise revenues may be adversely
affected. 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 self-insured coverage or within
the captive franchise insurance program could have a significant impact on our operating results.
Additionally, domestic franchisees are only required to purchase seasoned sauce and dough from our
quality control centers (“QC Centers”) and changes in purchasing practices by domestic franchisees
could adversely affect the financial results of our QC Centers. Our international operations are subject to
additional factors, including political and health conditions in the countries in which the Company or its