Papa Johns 2008 Annual Report Download - page 67

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60
The following table presents the average block price for cheese and the average BIBP block price by
quarter as projected through 2009 (based on the February 17, 2009 Chicago Mercantile Exchange (CME)
milk futures market prices):
Projected
Projected
Market
BIBP
2009 2009
Quarter 1 1.176$ 1.621$
Quarter 2 1.281 1.512
Quarter 3 1.508 1.639
Quarter 4 1.591 1.691
Full Year 1.389$ 1.616$
Block Price
The following table presents the 2008, 2007 and 2006 impact by quarter on our pre-tax income due to
consolidating BIBP. Additionally, based on the CME milk futures market prices as of February 17, 2009,
and the projected 2009 cheese costs to restaurants as determined by the revised BIBP pricing formula as
described above, the consolidation of BIBP is projected to increase our pre-tax income as follows in
2009 (in thousands):
Projected Actual Actual Actual
2009 2008 2007 2006
Quarter 1 11,402$ (7,951)$ (406)$ 5,389$
Quarter 2 5,423 (6,302) (8,257) 6,303
Quarter 3 2,941 2,826 (10,707) 5,336
Quarter 4 2,190 887 (12,339) 1,959
Full Year 21,956$ (10,540)$ (31,709)$ 18,987$
The 2009 projections above are based upon current futures market prices. Historically, actual results
have been subject to large fluctuations and have differed significantly from previous projections using
the futures market prices.
Over the long term, we expect to purchase cheese at a price approximating the actual average market
price and therefore we do not generally make use of financial instruments to hedge commodity prices.