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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark one)

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~June~~September 2827, 2011

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 333-138338

NPC INTERNATIONAL, INC.

(Exact name of registrant as specified in its charter)


KANSAS		48-0817298
(State or other jurisdiction of incorporation or organization)		(I.R.S. employer identification number)

7300 W. 129^th Street Overland Park, KS		66213
(Address of principal executive offices)		(Zip Code)

Telephone: (913) 327-5555

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ¨ No x

(Note: As a voluntary filer, not subject to the filing requirements, the registrant filed all reports required under Section 13 or 15(d) of the Exchange Act during the preceding 12 months.)

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large Accelerated filer ¨ Accelerated filer ¨ Non-accelerated filer x Smaller reporting company ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

There is no market for the Registrant’s equity. As of ~~August~~November 27, 2011, there were 1,000 shares of common stock outstanding.

INDEX

		Page		~~Page~~
Part I	FINANCIAL INFORMATION	~~FINANCIAL INFORMATION~~
Item 1.	Condensed Consolidated Financial Statements (unaudited)	~~Condensed Consolidated Financial Statements (unaudited)~~	3		3
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	~~Management’s Discussion and Analysis of Financial Condition and Results of Operations~~	13		12
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	~~Quantitative and Qualitative Disclosures About Market Risk~~	23		22
Item 4.	Controls and Procedures	~~Controls and Procedures~~	23		22
Part II	OTHER INFORMATION	~~OTHER INFORMATION~~
Item 1.	Legal Proceedings	~~Legal Proceedings~~	24		23
Item 1A.	Risk Factors	~~Risk Factors~~	24		23
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	~~Unregistered Sales of Equity Securities and Use of Proceeds~~	24		23
Item 3.	Defaults Upon Senior Securities	~~Defaults Upon Senior Securities~~	24		23
Item 4.	Removed and Reserved	~~Removed and Reserved~~	24		23
Item 5.	Other Information	~~Other Information~~	24		23
Item 6.	Exhibits	~~Exhibits~~	25		24
Signatures			26		25
Exhibit Index			27		26

PART I

PART 1.

FINANCIAL INFORMATION

Item 1.

Condensed Consolidated Financial Statements

NPC INTERNATIONAL, INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited)

(in thousands, except share and per share data)

	June 28,2011			December 28,2010
	September 27,2011			December 28,2010
Assets
Current assets:
Cash and cash equivalents	$	5166,~~594~~288		$	44,159
Accounts receivable		34,~~714~~328			4,464
Inventories		6,~~808~~529			7,163
Prepaid expenses and other current assets		54,~~566~~345			3,867
Assets held for sale		~~458~~260			799
Deferred income taxes		4,~~835~~760			5,434
Total current assets		72,975			65,886
Income taxes receivable		381			—
Facilities and equipment, less accumulated depreciation of $133,553 and $129,566, respectively		133,883			143,713
Total current assets		86,891			65,886
Franchise rights, less accumulated amortization of $45,768 and $41,014, respectively		394,729			399,248
Facilities and equipment, less accumulated depreciation of $141,075 and $129,566, respectively		134,411			143,713
Franchise rights, less accumulated amortization of $48,147 and $41,014, respectively		392,435			399,248
Goodwill		191,701			191,701
Other assets, net		2421,~~263~~697			24,680
Total assets	$	~~817~~827,~~551~~135		$	825,228
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	2426,~~116~~274		$	22,722
Accrued liabilities		3940,~~984~~224			39,384
Accrued interest		37,~~266~~377			4,386
Income taxes payable		~~160~~—			389
Current portion of insurance reserves		9,~~520~~469			9,523
Current portion of debt		1,046			29,670
Total current liabilities		7884,~~092~~390			106,074
Long-term debt		371,654			372,700
Other deferred items		32,~~901~~922			30,831
Insurance reserves		13,~~377~~176			12,840
Deferred income taxes		123,~~517~~367			120,451
Total long-term liabilities		541,~~449~~119			536,822
Commitments and contingencies
Stockholders’ equity:
Common stock ($0.01 par value, 2,000 shares authorized and 1,000 shares issued and outstanding as of June 28, 2011 and December 28, 2010)		—			—
Common stock ($0.01 par value, 2,000 shares authorized and 1,000 shares issued and outstanding as of September 27, 2011 and December 28, 2010)		—			—
Paid-in-capital		163,~~502~~532			163,443
Accumulated other comprehensive loss		(~~234~~117	)		(1,197	)
Retained earnings		3438,~~742~~211			20,086
Total stockholders’ equity		~~198~~201,~~010~~626			182,332
Total liabilities and stockholders’ equity	$	~~817~~827,~~551~~135		$	825,228

See accompanying notes to the condensed consolidated financial statements.

NPC INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(in thousands)

	13 WeeksEndedJune 28,2011			13 WeeksEndedJune 29,2010
	13 Weeks Ended
	Sept. 27,2011			Sept. 28,2010
Sales:
Net product sales	$	228,~~083~~021		$	~~235~~226,~~955~~748
Fees and other income		109,~~540~~830			10,~~841~~419
Total sales		~~238~~237,~~623~~851			~~246~~237,~~796~~167
Costs and expenses:
Cost of sales		6870,~~766~~695			7165,~~919~~879
Direct labor		6766,~~219~~841			7069,~~787~~255
Other restaurant operating expenses		7374,~~190~~113			7476,~~578~~381
General and administrative expenses		13,~~511~~102			1211,~~298~~884
Corporate depreciation and amortization of intangibles		23,~~940~~078			2,~~837~~894
Other		~~589~~902			~~426~~329
Total costs and expenses		~~226~~228,~~215~~731			~~232~~226,~~845~~622
Operating income		129,~~408~~120			1310,~~951~~545
Interest expense		(6,~~195~~131	)		(7,~~349~~278	)
Income before income taxes		62,~~213~~989			63,~~602~~267
Income tax expense		1,063			1,482
Income tax benefit		(480	)		(222	)
Net income	$	53,~~150~~469		$	53,~~120~~489

See accompanying notes to the condensed consolidated financial statements.

NPC INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(in thousands)

	26 WeeksEndedJune 28,2011			26 WeeksEndedJune 29,2010
	39 Weeks Ended
	Sept. 27,2011			Sept. 28,2010
Sales:
Net product sales	$	~~467~~695,~~706~~727		$	~~488~~715,~~584~~332
Fees and other income		2231,~~045~~875			2233,~~668~~087
Total sales		~~489~~727,~~751~~602			~~511~~748,~~252~~419
Costs and expenses:
Cost of sales		~~138~~209,~~553~~248			~~147~~213,~~890~~769
Direct labor		~~137~~204,~~457~~298			~~145~~214,~~674~~929
Other restaurant operating expenses		~~147~~222,~~977~~090			~~152~~228,~~569~~950
General and administrative expenses		2639,~~318~~420			2436,~~444~~328
Corporate depreciation and amortization of intangibles		58,~~900~~978			58,~~676~~570
Other		~~628~~1,530			~~786~~1,115
Total costs and expenses		~~456~~685,~~833~~564			~~477~~703,~~039~~661
Operating income		3242,~~918~~038			3444,~~213~~758
Interest expense		(1219,~~944~~075	)		(1422,~~874~~152	)
Income before income taxes		1922,~~974~~963			1922,~~339~~606
Income tax expense		54,~~318~~838			4,~~759~~537
Net income	$	1418,~~656~~125		$	1418,~~580~~069

See accompanying notes to the condensed consolidated financial statements.

NPC INTERNATIONAL, INC.

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

(Unaudited)

(in thousands, except share data)

	Sharesof commonstock		Commonstock		Paid-in-capital		Retainedearnings		Accumulatedothercomprehensiveloss			Totalstockholders’equity
Balance at December 28, 2010		1,000	$	—	$	163,443	$	20,086	$	(1,197	)	$	182,332
Restricted common units						5989							5989
Comprehensive income:
Net income		—		—		—		1418,~~656~~125		—			1418,~~656~~125
Net unrealized change in cash flow hedging derivatives		—		—		—		—		~~102~~27			~~102~~27
Reclassification adjustment into income for derivatives used in cash flow hedges		—		—		—		—		~~861~~1,053			~~861~~1,053
Total comprehensive income													1519,~~619~~205
Balance at June 28, 2011		1,000	$	—	$	163,502	$	34,742	$	(234	)	$	198,010
Balance at September 27, 2011		1,000	$	—	$	163,532	$	38,211	$	(117	)	$	201,626

See accompanying notes to the condensed consolidated financial statements.

NPC INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(in thousands)

	26 WeeksEndedJune 28,2011			26 WeeksEndedJune 29,2010
	39 Weeks Ended
	Sept. 27,2011			Sept. 28,2010
Operating activities
Net income	$	1418,~~656~~125		$	1418,~~580~~069
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization		2233,~~867~~991			2234,~~523~~217
Amortization of debt issuance costs		1,~~265~~905			1,~~285~~930
Net facility impairment charges		710			~~844~~1,183
Deferred income taxes		32,~~047~~897			~~(282~~2,634	)
Other		~~(23~~118	)		(7150	)
Changes in assets and liabilities, excluding acquisitions:
Accounts receivable		~~742~~261			~~953~~777
Inventories		~~355~~634			~~498~~126
Prepaid expenses and other current assets		(~~2,032~~874	)		(~~1,167~~618	)
Accounts payable		13,~~394~~552			~~(66~~1,404	)
Income taxes		(~~229~~770	)		52,~~796~~850
Accrued interest		(12,~~120~~991	)		~~(457~~3,630	)
Accrued liabilities		1,~~742~~943			43,~~475~~225
Insurance reserves		~~534~~282			1,~~681~~773
Other deferred items		~~526~~1,610			67(1,511	)
Other assets		~~294~~1,054			(~~586~~605	)
Net cash provided by operating activities		4468,~~728~~429			5069,~~073~~034
Investing activities
Capital expenditures		(817,~~727~~763	)		(813,~~643~~884	)
Proceeds from sale or disposition of assets		~~618~~647			2,~~081~~102
Net cash used in investing activities		(817,~~109~~116	)		(611,~~562~~782	)
Financing activities
Borrowings under revolving credit facility		—			13,105
Payments under revolving credit facility		—			(13,105	)
Payments on term bank facilities		(29,670	)		(31,340	)
Debt issue costs		—			(26	)
Proceeds from sale-leaseback transactions		486			865
Proceeds from sale-leaseback transactions		486			—
Net cash used in financing activities		(29,184	)		(30,475	)
Net cash used in financing activities		(29,184	)		(31,366	)
Net change in cash and cash equivalents		22,129			26,777
Net change in cash and cash equivalents		7,435			12,145
Beginning cash and cash equivalents		44,159			14,669
Ending cash and cash equivalents	$	5166,~~594~~288		$	2641,~~814~~446
Supplemental disclosures of cash flow information:
Net cash paid for interest	$	1214,~~795~~180		$	1416,~~046~~593
Net cash paid (received) for income taxes	$	2,027		$	(1,087	)
Net cash paid for income taxes	$	2,323		$	98

See accompanying notes to the condensed consolidated financial statements.

NPC INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1 – Basis of Presentation

NPC International, Inc. is referred to herein as “NPC” and “the Company.” NPC Acquisition Holdings, LLC, its parent company, is referred to herein as “Holdings.”

On November 6, 2011, Holdings and all of Holding’s equity holders entered into a definitive purchase and sale agreement with a company formed by Olympus Growth Fund V, L.P. (“Olympus”) pursuant to which Olympus is to acquire all of the issued and outstanding equity interests in Holdings. See Note 10 Subsequent Events, of the Notes to Condensed Consolidated Financial Statements (unaudited).

The accompanying unaudited interim condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for reporting on Form 10-Q. Accordingly, certain information and disclosures required by accounting principles generally accepted in the United States for complete consolidated financial statements are not included herein.

The interim statements should be read in conjunction with the financial statements and notes thereto included in the Company’s latest Annual Report on Form 10-K.

The results of operations of any interim period are not necessarily indicative of the results of operations for the full year. The Company believes the accompanying unaudited interim condensed consolidated financial statements include all adjustments (consisting of normal recurring adjustments and accruals) necessary to fairly present the Company’s condensed consolidated results of operations, financial position and cash flows as of the dates and for the periods presented.

Note 2 – Goodwill and Other Intangible Assets

There were no changes in goodwill during the 2639 weeks ended ~~June~~September 2827, 2011. Additionally, the Company ~~completed~~ completed its annual impairment testing during the second quarter of 2011 and determined that goodwill was not impaired.

Amortizable other intangible assets consist of franchise rights, leasehold interests, internally developed software and a non-compete agreement. These intangible assets are amortized on a straight-line basis over the lesser of their economic lives or the remaining life of the applicable agreement. Intangible assets subject to amortization are summarized below (in thousands):

	June 28, 2011
	September 27, 2011
	Gross CarryingAmount			AccumulatedAmortization			Net BookValue
Amortizable intangible assets:
Franchise rights	$	440,~~497~~582		$	(4548,~~768~~147	)	$	~~394~~392,~~729~~435
Favorable leasehold interests		10,029			(3,~~386~~589	)		6,~~643~~440
Unfavorable leasehold interests		(4,016	)		1,~~766~~860			(2,~~250~~156	)
Internally developed software		1,069			(1,069	)		—
	$	447,~~579~~664		$	(4850,~~457~~945	)	$	~~399~~396,~~122~~719
	December 28, 2010
	Gross CarryingAmount			AccumulatedAmortization			Net BookValue
Amortizable intangible assets:
Franchise rights	$	440,262		$	(41,014	)	$	399,248
Favorable leasehold interests		10,071			(3,022	)		7,049
Unfavorable leasehold interests		(4,327	)		1,797			(2,530	)
Internally developed software		1,069			(998	)		71
Non-compete		1,925			(1,797	)		128
	$	449,000		$	(45,034	)	$	403,966

Amortization expense on intangible assets was $2.5 million and $2.6 million for the 13 weeks ended ~~June~~September 2827, 2011 and ~~June~~September 2928, 2010, respectively, and $57.16 million ~~for~~and ~~both~~$7.7 million for the 2639 weeks ended ~~June~~September 2827, 2011 and ~~June~~September 2928, 2010, respectively.

Note 3 – Debt

The Company’s debt consisted of the following (in thousands):

	June 28,2011		December 28,2010
	September 27,2011		December 28,2010
Senior Secured Term Loan Note	$	197,700	$	227,370
Senior Subordinated Notes		175,000		175,000
Senior Secured Revolving Credit Facility		—		—
Senior Secured Revolving Credit Facility(1)		—		—
		372,700		402,370
Less current portion		1,046		29,670
	$	371,654	$	372,700

~~The~~(1) ~~Company’s~~At ~~debt~~September ~~facilities contain restrictions on additional borrowings~~27, ~~certain~~2011 ~~asset~~and ~~sales, capital~~December ~~expenditures~~28, ~~dividend payments~~2010, ~~certain~~we ~~investments~~had ~~and~~$57.3 ~~related-party~~million ~~transactions,~~of asborrowing ~~well~~capacity asavailable ~~requirements~~under toour ~~maintain~~revolving ~~various~~line ~~financial~~of ~~ratios. At June 28~~credit, ~~2011,~~net ~~the~~of ~~Company~~$17.7 ~~was~~million inof ~~compliance~~outstanding ~~with~~letters ~~all~~ of ~~its debt covenants~~credit.

~~Based~~The ~~upon the amount of excess cash flow generated during fiscal 2010 and the~~ Company’s ~~leverage~~debt atfacilities ~~fiscal~~contain ~~2010~~restrictions ~~year~~on ~~end~~additional borrowings, ~~each~~certain ofasset ~~which~~sales, iscapital ~~defined~~expenditures, individend ~~the~~payments, ~~credit~~certain ~~agreement~~investments ~~for~~and ~~the~~related-party ~~senior secured credit facility~~transactions, ~~the~~as ~~Company~~well ~~was~~as ~~required~~requirements to ~~make~~maintain anvarious ~~excess~~financial ~~cash flow mandatory prepayment of $29~~ratios.7 ~~million.~~At ~~This amount was included in the current portion of long-term debt at December~~September 2827, ~~2010 and was paid utilizing cash reserves on February 24,~~ 2011~~. Based on currently expected 2011 results~~, the Company ~~anticipates~~was ~~that it will be required to make a mandatory prepayment of between $11 million and $14~~in ~~million~~compliance inwith ~~April~~all ~~2012 depending upon the amount~~ of ~~excess cash flow generated during~~ its ~~fiscal~~debt ~~year and its leverage at fiscal year-end~~covenants. As this is a preliminary estimate, the final excess cash flow mandatory prepayment could ultimately differ materially from the amounts reflected above and as such the Company has not reflected any of this estimate as a current liability.

Based upon the amount of excess cash flow generated during fiscal 2010 and the Company’s leverage at fiscal 2010 year end, each of which is defined in the credit agreement for the senior secured credit facility, the Company was required to make an excess cash flow mandatory prepayment of $29.7 million. This amount was included in the current portion of long-term debt at December 28, 2010 and was paid utilizing cash reserves on February 24, 2011. Based on currently expected 2011 results, the Company anticipates that it will be required to make a mandatory prepayment of between $20 million and $24 million in April 2012 depending upon the amount of excess cash flow generated during its fiscal year and its leverage at fiscal year-end. As this is a preliminary estimate, the final excess cash flow mandatory prepayment could ultimately differ materially from the amounts reflected above and as such the Company has not reflected any of this as a current liability.

The estimated fair value of the Company’s debt facilities was as follows (in thousands):

	June 28,2011		December 28,2010
	September 27,2011		December 28,2010
Senior Secured Term Loan Note	$	~~195~~191,~~723~~769	$	225,096
Senior Subordinated Notes		~~177~~173,~~188~~688		178,728
Senior Secured Revolving Credit Facility		—		—
	$	~~372~~365,~~911~~457	$	403,824
Carrying value	$	372,700	$	402,370

The Company determined the estimated fair value using available market information. However, the fair value estimates presented herein are not necessarily indicative of the amount that the Company’s debt holders could realize in an actual market transaction.

Note 4 – Income Taxes

For the 2639 weeks ended ~~June~~September 2827, 2011, the Company recorded income tax expense of $54.38 million which resulted in in an effective income tax rate of 2621.61% compared to income tax expense of $4.85 million or an effective tax rate of 2420.61% last year. The lower than statutory rate for both periods was primarily attributable to tax credits.

For the ~~second~~third quarter of 2011, the Company recorded an income tax ~~expense~~benefit of $10.15 million ~~which~~compared ~~resulted~~to in an ~~effective~~ income tax ~~rate~~benefit of ~~17.1%~~ ~~compared to income tax expense of~~ $10.5 2 million for ~~an effective tax rate of 22.4% for~~ the ~~second~~third quarter of 2010. The lower effective rate for the current quarter as compared to the 2011 full year projected rate of 2621.61% is due to anrevised ~~increase in~~projected ~~estimated~~taxable ~~tax~~income ~~credits~~for ~~to be earned in 2011 than estimated in~~ the ~~first~~full ~~quarter~~fiscal year.

Note 5 – Commitments and Contingencies

As previously disclosed, the Company is a defendant in a lawsuit entitled Jeffrey Wass and Mark Smith, et al. v. NPC International, Inc., Case No. 2:09-CV-2254-JWL-KGS, in the United States District Court for the District of Kansas. The lawsuit alleges a collective action under the Fair Labor Standards Act (“FLSA”) on behalf of plaintiffs and similarly situated workers employed by NPC in 28 states, and a class action under Rule 23 of the Federal Rules of Civil Procedure on behalf of Plaintiff Smith and similarly situated workers employed in states in which the state minimum wage is higher than the federal minimum wage. The lawsuit alleges among other things that NPC deprived plaintiffs and other NPC delivery drivers of minimum wages by providing insufficient reimbursements for automobile and other job-related expenses incurred for the purposes of delivering NPC’s pizza and other food items.

~~On March 28, 2011, the court granted conditional collective action certification under the~~ ~~FLSA~~minimum wage. ~~Unlike~~The alawsuit ~~class~~alleges ~~action,~~among aother ~~collective~~things ~~action~~that ~~requires~~NPC ~~potential~~deprived ~~class~~plaintiffs ~~members~~and toother ~~“opt~~NPC ~~in”~~delivery ~~rather~~drivers ~~than~~of ~~“opt~~minimum ~~out.”~~wages Onby ~~April~~providing ~~27,~~insufficient ~~2011,~~reimbursements afor ~~third-party~~automobile ~~administrator~~and ~~mailed a notice to approximately 33,615 potential opt-ins. On or~~other ~~about July 15, 2011, the third~~job-~~party~~related ~~administrator~~expenses ~~mailed~~incurred ~~a notice to an additional 5,682 potential opt-ins. The opt-in period~~ for the ~~first~~purposes ~~group closed on July 26, 2011. The period for the second group~~ of ~~opt-ins~~delivering ~~will~~NPC’s ~~close~~pizza onand orother ~~about~~food ~~October 11, 2011~~items. ~~As of July 28, 2011, approximately 4,414 opt-in notices have been returned.~~

On March 28, 2011, the court granted conditional collective action certification under the FLSA. Unlike a class action, a collective action requires potential class members to “opt in” rather than “opt out.” On April 27, 2011, a third-party administrator mailed a notice to approximately 33,615 potential opt-ins. On or about July 15, 2011, the third-party administrator mailed a notice to an additional 5,682 potential opt-ins. The opt-in period for the first group closed on July 26, 2011. The period for the second group of opt-ins closed on or about October 11, 2011. As of October 12, 2011, approximately 5,588 opt-in notices have been returned. The parties have not yet briefed whether each notice was timely filed and reflects eligible drivers.

On March 23, 2011, in response to NPC’s summary-judgment motion, Plaintiffs’ filed an expert declaration in relation to NPC’s reimbursement model. On April 14, 2011, the Court ruled that it would hold the NPC summary-judgment motion in abeyance until the merits process is completed. The Court has set a trial date of November 1, 2012.

On July 22, 2011, plaintiffs’ filed a Rule 23 motion, seeking certification of a class of delivery drivers in each of the following eight states in which the state minimum wage is higher than the federal minimum wage: Arkansas, Colorado, Florida, Illinois, Iowa, Missouri, Oregon and Washington. ~~Because~~ Because Plaintiffs have moved for certification under Rule 23, the classes they seek would be opt-out classes. On September 21, 2011, NPC filed its opposition to plaintiffs’ Rule 23 motion. Plaintiffs’ filed their reply on October 21, 2011.

At this time the Company is not able to predict the outcome of the lawsuit, any possible loss or possible range of loss associated with the lawsuit or any potential effect on the Company’s business, results of operations or financial condition. However, the Company believes the lawsuit is wholly without merit and will defend itself from these claims vigorously.

Note 6 – Derivative Financial Instruments

The Company participates in interest rate related derivative instruments to manage its exposure on its debt instruments, which the Company designated as cash flow hedges. Gains and losses on derivative instruments designated as cash flow hedges are reported in other comprehensive income and reclassified into earnings in the periods in which earnings are impacted by the hedged item. The following interest rate swap ~~contracts~~contract ~~were~~was entered into as a hedge to fix a portion of the term loan notes under the Senior Secured Credit Facility and ~~provide~~provides for a fixed ~~rates~~rate as compared to the three-month LIBOR rate on the following notional ~~amounts~~amount of floating rate debt at ~~June~~September 2827, 2011:


Effective Date	Notional Amount (in thousands)		Fixed Rate Paid		Maturity Date
November 18, 2008	$	30,000		2.81%	November 18, 2011

The following table presents the fair value of the Company’s hedging portfolio as of ~~June~~ September 2827, 2011 and December 28, 2010 (in thousands):

Liability Derivatives
Balance Sheet Location	Fair Value
	June 28,2011		December 28,2010
	September 27,2011		December 28,2010
Accrued liabilities	$	~~385~~193	$	1,966

The effect of the derivative ~~instruments~~instrument on the unaudited Condensed Consolidated Financial Statements was as follows (in thousands):

Gain (Loss)Recognized in OCI onDerivative Instruments(Effective Portion)

LossReclassified fromAccumulated OCI intoIncome (Effective Portion)

For the13 Weeks Ended

For ~~the26~~the39 Weeks Ended

For the13 Weeks Ended

For ~~the26~~the39 Weeks Ended

June 28,2011

June 29,2010

June 28,2011

June 29,2010

Location

June 28,2011

June 29,2010

June 28,2011

June 29,2010

Sept. 27,2011

Sept. 28,2010

Sept. 27,2011

Sept. 28,2010

Location

Sept. 27,2011

Sept. 28,2010

Sept. 27,2011

Sept. 28,2010

Interest rate contracts

73(75

)

(~~441~~683

)

~~102~~27

(1,~~091~~774

)

Interest expense

(~~219~~192

)

(1,~~121~~060

)

(~~861~~1,053

)

(23,~~265~~325

)

The Company currently expects that approximately $0.4 million of the change in the fair value of the swap contract included in “Accumulated other comprehensive loss” as of June 28, 2011 will be realized in earnings as additional interest expense within the next twelve months, contemporaneously with the net settlement of the underlying interest payments, which may vary based on actual changes within the LIBOR market rates.

The Company estimates the fair value of its interest rate swap contracts using independent market data considered to be a Level 2 observable input. The Company uses a mark-to-market valuation based on observable interest rate yield curves which are adjusted for credit risk. During the second quarter of fiscal 2011 and 2010, there was virtually no ineffectiveness related to cash flow hedges.

The Company currently expects that approximately $0.2 million of the change in the fair value of the swap contract included in “Accumulated other comprehensive loss” as of September 27, 2011 will be realized in earnings as additional interest expense during the fourth quarter, contemporaneously with the net settlement of the underlying interest payments, which may vary based on actual changes within the LIBOR market rates.

The Company estimates the fair value of its interest rate swap contracts using independent market data considered to be a Level 2 observable input. The Company uses a mark-to-market valuation based on observable interest rate yield curves which are adjusted for credit risk. During the third quarter of fiscal 2011 and 2010, there was virtually no ineffectiveness related to cash flow hedges.

Note 7 – Comprehensive Income

Comprehensive income is comprised of the following:

13 Weeks Ended

2639 Weeks Ended

June 28,2011

June 29,2010

June 28,2011

June 29,2010

Sept. 27,2011

Sept. 28,2010

Sept. 27,2011

Sept. 28,2010

Net income

53,~~150~~469

53,~~120~~489

1418,~~656~~125

1418,~~580~~069

Change in valuation of interest rate swap agreements, net of tax

~~292~~117

~~680~~377

~~963~~1,080

1,~~174~~551

Comprehensive income

53,~~442~~586

53,~~800~~866

1519,~~619~~205

1519,~~754~~620

Note 8 – Related-Party Transactions

Merrill Lynch Global Private Equity (“MLGPE”) Advisory Agreement. On May 3, 2006, the Company entered into an advisory agreement with an affiliate of MLGPE pursuant to which such entity or its affiliates will provide advisory services to the Company. Under the agreement MLGPE or its affiliates will continue to provide financial, investment banking, management advisory and other services on the Company’s behalf for an annual fee of $1.0 million. The Company has paid $1.0 million to MLGPE for this fee for fiscal 2011 and fiscal 2010, which is being amortized ratably to expense.

Bank of America Merchant Services. In January 2009, Bank of America Corporation (“BOA”) acquired the parent company of MLGPE, Merrill Lynch & Co., Inc. During both the 2639 weeks ended ~~June~~September 2827, 2011 and ~~June~~September 2928, 2010, the Company paid Bank of America Merchant Services, an affiliate of BOA, $0.23 million for credit card processing services.

Bank of America, N.A. In December 2009, the Company opened a money market account with Bank of America, N.A., ana affiliate of BOA, to invest any excess cash balances on hand. As of ~~June~~September 2827, 2011, the Company had $4863.01 million invested in this account. These investments are trading securities, which are included in cash and cash equivalents, and the fair value of the investment was determined using independent market data considered to be a Level 2 observable input.

Participation in Senior Secured Credit Facility. Bank of America, N.A., an affiliate of BOA, and Merrill Lynch Capital Corporation (“MLCC”), an affiliate of MLGPE, were active participants in the Company’s Senior Secured Credit Facility. As of ~~June~~September 2827, 2011, Bank of America, N.A., held $1.7 million, or 1.0%, of the term loan notes outstanding and $12.5 million, or 16.7%, of the revolving credit facility, and MLCC held $7.5 million, or 10.0%, of the revolving credit facility. The Company had no amounts outstanding on the revolving credit facility as of ~~June~~September 2827, 2011.

Note 9 – New Accounting Pronouncements

In June 2011, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2011-05, Presentation of Comprehensive Income (“ASU 2011-05”). This standard eliminates the current option to report other comprehensive income and its components in the statement of changes in equity and requires reporting of all non owner changes in stockholders’ equity either in a single continuous statement of comprehensive income or in two separate but consecutive statements. ASU 2011-05 is effective for reporting periods beginning after December 15, 2011 and interim and annual periods thereafter. Early adoption is permitted, but full retrospective application is required. The provisions of ASU 2011-05 will not have an effect on the financial position, results of operations or cash flows of the Company.

In September 2011, the FASB issued ASU 2011-08, Intangibles—Goodwill and Other (Topic 350), Testing Goodwill for Impairment (“ASU 2011-08”), which permits an entity to make a qualitative assessment of whether it is more likely than not that a reporting unit’s fair value is less than its carrying value before applying the two-step quantitative goodwill impairment test that is currently in place. If it is determined through the qualitative assessment that a reporting unit’s fair value is more likely than not greater than its carrying value, the remaining impairment steps would be unnecessary. The qualitative assessment is optional, allowing companies to go directly to the quantitative assessment. This update is effective for annual and interim goodwill impairment tests performed in fiscal years beginning after December 15, 2011, however early adoption is permitted. The Company does not currently expect the provisions of ASU 2011-08 to have a material effect on the financial position, results of operations or cash flows of the Company.

Note 10 — Subsequent Event

On November 6, 2011, Holdings and all of Holdings equity holders entered into a definitive purchase and sale agreement with a company formed by Olympus Growth Fund V, L.P. (“Olympus”) pursuant to which Olympus is to acquire all of the issued and outstanding equity interests in Holdings for an undisclosed amount. All of the Company’s funded indebtedness is to be repaid by the purchaser at the closing of the sale of the equity interests. The transaction is subject to customary closing conditions, including certain regulatory approvals, and is currently expected to close on December 28, 2011.

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Cautionary Statement Regarding Forward Looking Information

This report includes forward-looking statements regarding, among other things, our plans, strategies, and prospects, both business and financial. All statements contained in this document other than historical information are forward-looking statements. Forward-looking statements include, but are not limited to, statements that represent our beliefs concerning future operations, strategies, financial results or other developments, and may contain words and phrases such as “may,” “expect,” “should,” “anticipate,” “intend,” or similar expressions. Because these forward-looking statements are based on estimates and assumptions that are subject to significant business, economic and competitive uncertainties, many of which are beyond our control or are subject to change, actual results could be materially different. Although we believe that our plans, intentions and expectations reflected in or suggested by these forward-looking statements are reasonable, there can be no assurance we will achieve or realize these plans, intentions or expectations. Forward-looking statements are inherently subject to risks, uncertainties and assumptions. Important factors that could cause actual results to differ materially from our forward-looking statements, expectations and historical trends include, but are not limited to, the following:

•

competitive conditions;

•

general economic and market conditions;

•

effectiveness of franchisor advertising programs and the overall success of the franchisor;

•

increases in commodity, labor, fuel and other costs;

•

effectiveness of the hedging program for cheese prices directed by the Unified Foodservice Purchasing Co-op (“UFPC”);

•

significant disruptions in service or supply by any of our suppliers or distributors;

•

changes in consumer tastes, geographic concentration and demographic patterns;

•

consumer concerns about health and nutrition;

•

our ability to manage our growth and successfully implement our business strategy;

•

the effect of disruptions to our computer and information systems;

•

the effect of local conditions, events and natural disasters;

•

general risks associated with the restaurant industry;

•

the outcome of pending or yet-to-be instituted legal proceedings;

•

regulatory factors, including changing laws related to healthcare coverage and menu labeling, which may adversely affect our business operations;

•

the loss of our executive officers and certain key personnel;

•

our ability to service our substantial indebtedness;

•

restrictions contained in our debt agreements;

•

availability, terms and deployment of capital;

• our ability to obtain debt or equity financing on reasonable terms or at costs similar to that of our current credit facility; and

• ~~and,~~ various other factors beyond our control.

Consequently, such forward-looking statements should be regarded solely as our current plans, estimates and beliefs. We do not intend, and do not undertake, any obligation to update any forward looking statements to reflect future events or circumstances after the date of such statements. For a more detailed discussion of the principal factors that could cause actual results to be materially different, you should read our risk factors in Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 28, 2010 (“2010 Form 10-K”) as well as our unaudited condensed consolidated financial statements, related notes, and other financial information appearing elsewhere in this report and our other filings with the Securities and Exchange Commission.

Overview

Who We Are. We are the largest Pizza Hut franchisee and the largest franchisee of any restaurant concept in the United States (U.S.) according to the 2010 “Top 200 Restaurant Franchisees” by Franchise Times. We are also the eighth largest

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restaurant unit operator in the U.S. according to the 2011 “Chain Restaurant Industry Review” by GE Capital Franchise Finance. We were founded in 1962 and, as of ~~June~~ September 2827, 2011 we operated 1,~~140~~153 Pizza Hut units in 28 states with significant presence in the Midwest, South and Southeast. As of the ~~second~~third quarter of 2011, our operations represented approximately 19% of the domestic Pizza Hut restaurant system and 21% of the domestic Pizza Hut franchised restaurant system as measured by number of units, excluding licensed units which operate with a limited menu and no delivery in certain of our markets.

Our Fiscal Year. We operate on a 52- or 53-week fiscal year ending on the last Tuesday in December. Fiscal year 2011 and 2010 each contains 52 weeks.

Our Sales

Net Product Sales. Net product sales are comprised of sales of food and beverages from our restaurants, net of discounts. Year-to-date for fiscal 2011, pizza sales accounted for approximately 78% of net product sales. Various factors influence sales at a given unit, including customer recognition of the Pizza Hut brand, our level of service and operational effectiveness, pricing, marketing and promotional efforts and local competition. Several factors affect our sales in any period, including the number of units in operation, comparable store sales and seasonality. “Comparable store sales” refer to period-over-period net product sales comparisons for units under our operation for at least 12 months.

Fees and Other Income. Fees and other income are comprised primarily of delivery fees charged to customers, vending receipts and other fee income and are not included in our comparable store sales metric.

Seasonality. Our business is seasonal in nature with net product sales typically being higher in the first half of the fiscal year. Sales are largely driven by product innovation, advertising and promotional activities and can be adversely impacted by holidays and economic times that generally negatively impact consumer discretionary spending, such as the back to school season. As a result of these seasonal fluctuations, our operating results may vary substantially between fiscal quarters. Further, results for any quarter are not necessarily indicative of the results that may be achieved for the full fiscal year.

Restaurant formats. We operate our Pizza Hut restaurants through three different formats to cater to the needs of our customers in each respective market. Delivery units, or “Delcos,” are typically located in strip centers and provide delivery and carry-out, with a greater proportion being located in more densely populated areas. Red Roof units, or “RRs,” are traditional free-standing, dine-in restaurants which offer on-location dining room service as well as carry-out service. Restaurant-Based Delivery units, or “RBDs,” conduct delivery, dine-in, and carry-out operations from the same free-standing location. Approximately 4546% of our units include the WingStreet™ product line at ~~June~~September 2827, 2011. The WingStreet™ menu includes bone-in and bone-out fried chicken wings which are tossed in one of eight ~~sauces~~ sauces and appetizers which are available for dine-in, carry-out and delivery.

The following table sets forth certain information with respect to each year-to-date fiscal period:

	26 weeks endedJune 28, 2011					26 Weeks EndedJune 29, 2010
	39 Weeks Ended
Sales by occasion:
	Sept. 27,2011				Sept. 28,2010
Delivery			39%					38%
Sales by occasion:
Carryout			44%					45%
Delivery		37%				37%
Dine-in			17%					17%
Carryout		45%				45%
Number of restaurants open at the end of the period:
Dine-in		18%				18%
Delco			430					429
Number of restaurants open at the end of the period:
RR			180					182
Delco		445				428
RBD			530					534
RR		180				182
			1,140	(1)				1,145	(1)
RBD		528				533
		1,153	(1)			1,143	(1)

(1) Includes ~~516~~531 units and 513 units offering the WingStreet™ product line, at ~~June~~September 2827, 2011 and ~~June~~September 2928, 2010, respectively.

Our Costs

Our operating costs and expenses are comprised of cost of sales, direct labor, other restaurant expenses and general and administrative expenses. Our cost structure is highly variable with approximately 70% of operating costs variable to sales and volume of transactions.

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Cost of sales. Cost of sales includes the cost of food and beverage products sold, less rebates from suppliers, as well as paper and packaging, and is primarily influenced by fluctuations in commodity prices. Historically, our cost of sales has primarily been comprised of the following: cheese: 30-35%; dough: 16-19%; meat: 16-20%; and packaging: 8-10%. These costs can fluctuate from year-to-year given the commodity nature of the cost category, but are constant across regions. We are a member of the UFPC, a cooperative set up to act as a central procurement service for the operators of Yum! Brands, Inc. restaurants, and participate in various cheese hedging and procurement programs that are directed by the UFPC for cheese, meat and certain other commodities to help reduce the price volatility of those commodities from period-to-period. Based on information provided by the UFPC, the UFPC expects to hedge approximately 30% to 50% of the Pizza Hut system’s anticipated cheese purchases through a combination of derivatives taken under the direction of the UFPC.

Direct Labor. Direct labor includes the salary, payroll taxes, fringe benefit costs and workers’ compensation expense associated with restaurant based personnel. Direct labor is highly dependent on federal and state minimum wage rate legislation given that the vast majority of our workers are hourly employees. To control labor costs, we are focused on proper scheduling and adequate training of our store employees, as well as retention of existing employees.

Other restaurant operating expenses. Other restaurant operating expenses include all other costs directly associated with operating a restaurant facility, which primarily represents royalties, advertising, rent and depreciation (facilities and equipment), utilities, delivery expenses, supplies, repairs, insurance, and other restaurant related costs.

Included within other restaurant operating expenses are royalties paid to Pizza Hut, Inc. (“PHI”). Our blended average royalty rate for the year-to-date periods of both 2011 and 2010 was 4.8% of total sales.

General and administrative expenses. General and administrative expenses include field supervision and personnel costs and the corporate and administrative functions that support our restaurants, including employee wages and benefits, travel, information systems, recruiting and training costs, credit card transaction fees, professional fees, supplies and insurance.

Trends and Uncertainties Affecting Our Business

We believe that as a franchisee of such a large number of Pizza Hut restaurants, our financial success is driven less by variable factors that affect regional restaurants and their markets, and more by trends affecting the food purchase industry – specifically the Quick Service Restaurants or “QSR” industry. The following discussion describes certain key factors that may affect our future performance.

General Economic Conditions and Consumer Spending

Higher gas prices, continued high unemployment rates, lower home values and sales, the negative impact of changes in the credit markets, and low consumer confidence as a result of the changes within the economic environment have caused the consumer to experience a real and perceived reduction in disposable income which has negatively impacted consumer spending in most segments of the restaurant industry, including the segment in which we compete. Specifically, we believe pressures on low and lower-middle income customers continue to be significant, and we believe that these customers are particularly interested in receiving value at a reasonable price in the current environment.

Competition

The restaurant business is highly competitive. The QSR industry is a fragmented market, with competition from national and regional chains, as well as independent operators, which affects pricing strategies and margins. Additionally, the frozen pizza and take-and-bake alternatives are becoming an increasingly intrusive competitive threat in the pizza segment. Limited product variability within our segment can make differentiation among competitors difficult. Thus, companies in the industry continuously promote and market new product introductions, price discounts and bundled deals, and rely heavily on effective marketing and advertising to drive sales.

Commodity Prices

Commodity prices of packaging products (liner board) and ingredients such as cheese, dough (wheat), and meat, can vary. The prices of these commodities can fluctuate throughout the year due to changes in supply and demand. Our costs can also fluctuate as a result of changes in ingredients or packaging instituted by PHI. During the ~~second~~third quarter of 2011 we experienced ingredient inflation. The block cheese price for the ~~second~~third quarter of fiscal 2011 averaged $1.7998 per pound, an increase of $0.3736 or 2622% versus the average price for the ~~second~~third quarter of fiscal year 2010. Based on current market conditions, we expect the block cheese price, without giving effect to the UFPC directed hedging programs, to remain above prior year levels for most of the ~~third~~fourth quarter. Specifically, we expect block cheese prices ~~for the third quarter~~ to exceed the prior year by approximately $0.3215 to $0.4020 per pound which is an increase of 2010% to 2513% ~~over~~as ~~last~~compared to the prior year.

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Costs of dough and meat were higher in the current quarter than the ~~second~~third quarter of 2010 by 13by 16% and 56%, respectively. The Pizza Hut system has undertaken a significant cost savings initiative with the assistance of a third party consultant focused upon reducing the brand’s ingredient and operating costs. This initiative is expected to to reduce costs through a combination of sourcing and ingredient specification changes without negatively impacting the quality or quantity of our ingredients. To date in fiscal 2011 the initial stages of this initiative have secured over $5.0 ~~million~~ million in annual savings primarily through changes in the brand’s packaging platform. Total program savings from this initiative are expected to be realized over the next 24 to 30 months and could materially benefit our cost of sales.

Labor Cost

The restaurant industry is labor intensive and known for having a high level of employee turnover given low hourly wages and the part-time composition of the workforce. To the extent that our delivery sales mix increases due to acquisition of units or customer preference, our labor costs would be expected to increase due to the more labor intensive nature of the delivery transaction. Direct labor is highly dependent on federal and state minimum wage rate legislation given the vast majority of workers are hourly employees whose compensation is either determined or influenced by the minimum wage rate. Recently, there has been legislation passed to increase certain states’ minimum wage rates effective for 2012. We currently expect the increases in state minimum wage rates to increase direct labor expense by approximately $1.2 million in fiscal 2012. We have implemented certain labor optimization strategies and a change in pay practices for certain team members that are currently expected to benefit cost of labor by approximately $4.0 million to $6.0 million in fiscal 2011. Total savings for these initiatives are expected to increase over the next 24 to 30 months due to the normal course attrition of certain employees.

The federal government and several state governments have proposed or enacted legislation regarding health care, including legislation that in some cases requires employers to either provide health care coverage to their full-time employees, pay a penalty or pay into a fund that would provide coverage for them. We are currently evaluating the effects on our business of the Patient Protection and Affordable Care Act, which was signed into law on March 23, 2010, and the related Health Care and Education Reconciliation Act of 2010, which was signed into law on March 30, 2010 (collectively, the “Federal Health Care Acts”). The provisions of the Federal Health Care Acts having the greatest potential financial impact on us are scheduled to become effective in 2014. Based upon our current evaluation, without taking mitigating steps we expect that the Federal Health Care Acts will likely increase our future costs and could have a material adverse effect on our business, results of operations and financial condition, but we are currently unable to quantify the amount of the impact with any degree of certainty pending resolution of the litigation and proposed new legislation relating to the Federal Health Care Acts and future rulemaking under the Federal Health Care Acts.

Additionally, potential changes in federal labor laws and regulations relating to union organizing rights and activities could result in portions of our workforce being subjected to greater organized labor influence, thereby potentially increasing our labor costs, and could have a material adverse effect on our business, results of operations and financial condition.

Inflation and Deflation

Inflationary factors, such as increases in food and labor costs, directly affect our operations. Because most of our employees are paid on an hourly basis, changes in rates related to federal and state minimum wage and tip credit laws will affect our labor costs.

Significant increases in average gasoline prices in the regions in which we operate could increase our delivery driver reimbursement costs. We estimate that every $0.25 per gallon change in average gas prices in our markets impacts our annual operating results by approximately $0.9 million. However, as gas prices increase, the impact upon our operations is somewhat mitigated by a transfer of sales from the delivery occasion to the carry-out access mode, which is perceived as a higher value by consumers and benefits us with lower labor costs for the point-of-sale transaction.

If the economy experiences deflation, which is a persistent decline in the general price level of goods and services, we may suffer a decline in revenues as a result of the falling prices. In that event, given our fixed costs and minimum wage requirements, it is unlikely that we would be able to reduce our costs at the same pace as any declines in revenues. Consequently, a period of prolonged or significant deflation would likely have a material adverse effect on our business, results of operations and financial condition. Similarly, if we reduce the prices we charge for our products as a result of declines in comparable store sales or competitive pressures, we may suffer decreased revenues, margins, income and cash flow from operations.

~~Critical~~16 ~~Accounting Policies and Estimates~~

~~form~~Critical ~~the~~Accounting ~~basis~~Policies ~~for making judgments about the carrying values of assets~~ and ~~liabilities~~Estimates that are not readily apparent from other sources. If these estimates differ materially from actual results, the impact on the unaudited Condensed Consolidated Financial Statements may be material. Our critical accounting policies are available in Item 7 of our 2010 Form 10-K. There have been no significant changes with respect to these policies during the first 26 weeks of fiscal 2011.

Our discussion and analysis of our financial condition and results of operations are based upon our unaudited Condensed Consolidated Financial Statements. The preparation of these financial statements requires estimation and judgment that affect the reported amounts of revenues, expenses, assets, and liabilities. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. If these estimates differ materially from actual results, the impact on the unaudited Condensed Consolidated Financial Statements may be material. Our critical accounting policies are available in Item 7 of our 2010 Form 10-K. There have been no significant changes with respect to these policies during the first 39 weeks of fiscal 2011.

Recently Issued Accounting Statements and Pronouncements

See Note 9 of the unaudited Condensed Consolidated Financial Statements for new accounting standards, including the expected dates of adoption and estimated effects on our unaudited Condensed Consolidated Financial Statements.

Results of Operations

The table below presents (i) comparable store sales indices and (ii) selected restaurant operating results as a percentage of net product sales for the 13-week and 2639-week periods ended ~~June~~September 2827, 2011 and ~~June~~September 2928, 2010, respectively:

	13 WeeksEnded		2639 WeeksEnded
	June 28, 2011	June 29, 2010	June 28, 2011	June 29, 2010
	Sept. 27, 2011	Sept. 28, 2010	Sept. 27, 2011	Sept. 28, 2010
Comparable store sales	(20.84%)	10.49%	(32.85%)	10.35%
Net product sales	100%	100%	100%	100%
Direct restaurant costs and expenses:
Cost of sales	3031.10%	3029.51%	2930.61%	3029.39%
Direct labor	29.53%	30.05%	29.4%	2930.80%
Other restaurant operating expenses	32.15%	3133.67%	31.69%	3132.20%

Activity with respect to unit count is set forth in the table below:

	26 WeeksEndedJune 28, 2011					26 WeeksEndedJune 29, 2010
	39 Weeks Ended
Beginning of period			1,136					1,149
	Sept. 27, 2011				Sept. 28, 2010
Developed			5					—
Beginning of period		1,136				1,149
Closed			(1	)				(4	)
Developed(1)		19				1
End of period			1,140					1,145
Closed(1)		(2	)			(7	)
Equivalent units, continuing operations(1)			1,134					1,146
End of period		1,153				1,143
Equivalent units, continuing operations(2)		1,136				1,145

(1) ~~Equivalent~~For ~~units represent~~ the ~~number~~39 ofweeks ~~units~~ended ~~open~~September at27, ~~the~~2011 ~~beginning~~two ofunits awere ~~given~~relocated ~~period,~~or ~~adjusted~~rebuilt ~~for~~and ~~units~~are ~~opened,~~included ~~closed,~~in ~~acquired~~both ~~or sold during~~ the ~~period~~developed onand aclosed ~~weighted~~total ~~average basis~~above.

We(2) ~~added~~Equivalent ~~the~~units ~~WingStreet™~~represent ~~product~~the ~~line~~number toof ~~five~~ units ~~during~~open at the ~~first 26~~beginning ~~weeks~~ of ~~fiscal~~a ~~2011~~given period, adjusted for aunits ~~total~~opened, ofclosed, ~~516~~acquired ~~units~~or ~~offering~~sold during the ~~WingStreet™~~period ~~product~~on ~~line~~a atweighted ~~June 28,~~average ~~2011~~basis.

~~Thirteen~~We ~~Weeks~~added the WingStreet™ product line to 20 units (1 unit converted ~~Ended~~and ~~June 28,~~19 units newly constructed) during the first 39 weeks of fiscal 2011, ~~Compared~~for toa ~~June~~total of 531 units offering the WingStreet™ product line at September 2927, ~~2010~~2011.

~~Net~~Thirteen ~~Product~~Weeks ~~Sales.~~Ended ~~Net~~September 27, ~~product sales for the second quarter of~~ 2011 ~~compared~~Compared to ~~2010~~September 28, were $228.1 million and $236.0 million, respectively, a decrease of $7.9 million, or 3.3%, resulting largely from a comparable store sales decrease of 2.8% for the second quarter of 2011, rolling over last year’s second quarter comparable store sales increase of 10.4% and a 1.0% decrease in equivalent units. The decline in comparable store sales results is largely due to rolling over the significant growth derived from our $10 Any Pizza promotion offered for the second quarter of 2010.

~~Fees~~Net ~~and~~Product ~~Other Income~~Sales. ~~Fees~~Net ~~and~~product ~~other~~sales ~~income were $10.5 million~~ for the ~~second~~ third quarter of 2011, compared to 2010, were $10228.80 million ~~for~~and ~~the~~$226.7 ~~prior~~million, ~~year~~respectively, ~~for~~an aincrease ~~decrease~~ of $01.3 million, or 0.6%, resulting largely from a comparable store sales increase of 0.4% and a 0.2% decrease in equivalent units for the third quarter of 2011, rolling over last year’s third quarter comparable store sales increase of 10.89%. The ~~decrease~~positive ~~was~~comparable ~~due~~sales tofor ~~lower~~the ~~customer~~current quarter ~~delivery~~were ~~charge~~primarily ~~income~~derived from ~~decreased~~our ~~delivery~~$10 ~~transactions~~Any Carryout pizza promotion.

~~Cost~~Fees ofand ~~Sales~~Other Income. ~~Cost~~Fees ofand ~~sales~~other ~~was~~income were $689.8 million for the ~~second~~third quarter of 2011, compared to $7110.94 million for the prior year, for a decrease of $30.16 million or 45.47%. ~~Cost~~The ~~of sales decreased 0.4%, as a percentage of net product sales, to 30.1%, compared to 30.5% in the prior year. This~~ decrease was ~~largely~~ due to ~~higher~~lower ~~net~~customer ~~pricing~~delivery ~~for~~charge ~~2011~~income ~~and~~from ~~product~~decreased ~~mix~~delivery changes shifting both pizza size (medium instead of large) and fewer toppings (3 toppings or less) as a result of simplified pricing and other product promotions compared to the $10 Any Pizza promotion, which was offered exclusively in the prior year and resulted in increased sales of large and specialty (3+ topping) pizzastransactions. ~~Partially offsetting this decrease was higher ingredient costs, primarily cheese, dough and meat.~~

Direct Labor. Direct labor costs for the second quarter of 2011 and 2010 were $67.2 million and $70.8 million, respectively, a decrease of $3.6 million, or 5.0%. Direct labor costs were 29.5% of net product sales for the second quarter 2011, a 0.5% decrease compared to the prior year, primarily due to higher net pricing, lower average wage rates realized from the labor optimization strategies and change in pay practices of certain team members implemented at the beginning of fiscal 2011, improved labor efficiencies and lower health insurance costs due to favorable claims experience.

Other Restaurant Operating Expenses. Other restaurant operating expenses for the second quarter of 2011 and 2010 were $73.2 million and $74.6 million, respectively, a decrease of $1.4 million, or 1.9%. Other restaurant operating expenses were 32.1% of net product sales for the second quarter 2011 compared to 31.6% of net product sales for the prior year, an increase of 0.5%.

The changes in the other restaurant operating expenses as a percentage of net product sales are explained as follows:

Other restaurant operating expenses as a percentage of net product sales for the 13 weeks ended June 29, 2010	31.6	%
Rent and occupancy costs	0.3
Delivery driver reimbursement	0.2
Decreased restaurant manager bonuses	(0.2	)
Other expenses, net	0.2
Other restaurant operating expenses as a percentage of net product sales for the 13 weeks ended June 28, 2011	32.1	%

As a percentage of net product sales, fixed and semi-fixed costs, primarily occupancy costs, increased due to deleveraging of these fixed expenses as a result of lower comparable store sales. These increases were partially offset by lower restaurant manager bonuses and increased delivery driver reimbursement expenses largely due to higher fuel costs.

Depreciation expense for store operations was $7.7 million or 3.4% of net product sales for the second quarter of 2011 compared to $7.9 million or 3.3% of net product sales for the prior year.

General and Administrative Expenses. General and administrative expenses for the second quarter of 2011 were $13.5 million compared to $12.3 million for the second quarter of 2010, an increase of $1.2 million or 9.9%. This increase was largely due to the reinstatement of certain employee related incentive compensation programs and higher field training costs.

Corporate Depreciation and Amortization. Corporate depreciation and amortization costs were $2.9 million and $2.8 million for the second quarter of 2011 and 2010, respectively.

Other. We recorded $0.6 million of expense for facility impairment charges during the second quarter of 2011 as compared to $0.4 million for the second quarter of 2010.

Interest Expense. Interest expense was $6.2 million for the second quarter of 2011 compared to $7.3 million for the prior year, a decrease of $1.1 million due to lower average debt outstanding and lower interest rates as compared to the prior year. Our average outstanding debt balance decreased $29.9 million to $372.7 million for the second quarter of 2011 as compared to the same period last year and our cash borrowing rate decreased 0.7% to 5.9% for the second quarter of 2011 as compared to the prior year. Interest expense included $0.6 million for amortization of deferred debt issuance costs in both the second quarter 2011 and 2010.

Income Taxes. For the second quarter of 2011, the Company recorded income tax expense of $1.1 million which resulted in an effective income tax rate of 17.1% compared to income tax expense of $1.5 million for an effective tax rate of 22.4% for the second quarter of 2010. The lower effective rate for the current quarter as compared to the 2011 full year projected rate of 26.6% is due to an increase in estimated tax credits to be earned in 2011 than estimated in the first quarter.

Net Income. Net income for the second quarter of 2011 and 2010 was $5.2 million and $5.1 million, respectively. Restaurant operating margins decreased by $0.1 million for the second quarter of 2011 compared to the prior year due to decreased net product sales, higher ingredient costs and higher delivery expenses, which were nearly offset by higher net pricing from our simplified pricing strategy and other promotional activity introduced during the quarter and lower direct labor costs from cost management strategies implemented by management. General & administrative expenses increased due to the reinstatement of incentive compensation programs, which was more than offset by lower interest expense, which resulted in an increase in consolidated net income as compared to the prior year.

~~Twenty-Six~~Cost ~~Weeks~~of ~~Ended~~Sales. ~~June 28,~~Cost of sales was $70.7 million for the third quarter of 2011, compared ~~Compared~~to $65.9 million for the prior year for an increase of $4.8 million or 7.3%. Cost of sales increased 1.9%, as a percentage of net product sales, to ~~June~~ 31.0%, compared to 29.1% in the prior year. This increase was largely due to higher ingredient costs, ~~2010~~primarily cheese, dough and meat.

~~Net~~Direct ~~Product Sales~~Labor. ~~Net~~Direct ~~product~~labor ~~sales~~costs for the 26third ~~weeks~~quarter ~~ended~~of ~~June 28,~~ 2011 and 2010 were $~~467~~66.78 million ~~compared~~and to $~~488~~69.63 million, ~~for the same period of 2010~~respectively, a decrease of $202.95 million, or 4.3.5%,. ~~resulting~~Direct ~~largely~~labor ~~from~~costs awere ~~comparable~~29.3% ~~store~~of ~~sales~~net ~~decrease~~product ofsales ~~3.8%~~ for the 26third ~~weeks~~quarter ~~ended June 28,~~ 2011, ~~rolling over last year’s comparable store sales increase of 10.3% and~~ a 1.02% decrease incompared ~~equivalent~~to ~~units.~~the ~~The~~prior ~~decline~~year, inprimarily ~~comparable~~due ~~store~~to ~~sales~~lower ~~results~~average wage isrates ~~largely~~realized ~~due~~from tothe ~~rolling~~labor ~~over~~optimization ~~the~~strategies ~~significant~~and ~~growth~~change ~~derived~~in ~~from~~pay ~~our~~practices ~~$10~~of ~~Any~~certain ~~Pizza~~team ~~promotion~~members ~~offered~~implemented ~~for~~at the ~~first~~beginning ~~half~~ of ~~2010~~fiscal 2011 and improved labor efficiencies.

~~Fees~~Other ~~and~~Restaurant ~~Other~~Operating ~~Income~~Expenses. ~~Fees~~Other ~~and~~restaurant ~~other~~operating ~~income~~expenses ~~were $22.0 million~~ for the 26third ~~weeks~~quarter ~~ended~~of ~~June 28,~~ 2011, ~~compared~~and to2010 were $2274.7 1 million and ~~for~~$76.4 ~~the~~million, ~~prior year~~respectively, ~~for~~ a decrease of $02.73 million, or 23.70%. ~~The~~Other ~~decrease~~restaurant ~~was~~operating ~~due~~expenses towere ~~lower~~32.5% ~~customer~~of ~~delivery~~net ~~charge~~product ~~income~~sales ~~from~~for ~~decreased~~the ~~delivery~~third ~~transactions~~quarter 2011 compared to 33.7% of net product sales for the prior year, a decrease of 1.2%.

Cost of Sales. Cost of sales was $138.6 million for the 26 weeks ended June 28, 2011, compared to $147.9 million for the prior year for a decrease of $9.3 million or 6.3%. Cost of sales decreased 0.7%, as a percentage of net product sales, to 29.6%, compared to 30.3% in the prior year. This decrease was largely due to higher net pricing for 2011 and product mix changes shifting both pizza size (medium instead of large) and fewer toppings (3 toppings or less) as a result of simplified pricing and other product promotions compared to the $10 Any Pizza promotion, which was offered exclusively in the prior year and resulted in increased sales of large and specialty (3+ topping) pizzas. Partially offsetting this decrease was higher ingredient costs, primarily dough, meat and cheese.

Direct Labor. Direct labor costs for the 26 weeks ended June 28, 2011 as compared to the prior year were $137.5 million and $145.7 million, respectively, a decrease of $8.2 million, or 5.6%. Direct labor costs were 29.4% of net product sales for the 26 weeks ended June 28, 2011, a 0.4% decrease compared to the prior year. The favorable variance was primarily due to higher net pricing, lower average wage rates realized from the labor optimization strategies and change in pay practices of certain team members implemented at the beginning of fiscal 2011, and improved labor efficiencies.

Other Restaurant Operating Expenses. Other restaurant operating expenses for the 26 weeks ended June 28, 2011 as compared to the prior year were $148.0 million and $152.6 million, respectively, a decrease of $4.6 million, or 3.0%. Other operating expenses were 31.6% of net product sales for the 26 weeks ended June 28, 2011 compared to 31.2% of net product sales for the prior year, a decrease of 0.4%.

The changes in the other restaurant operating expenses as a percentage of net product sales are explained as follows:

Other restaurant operating expenses as a percentage of net product sales for the 26 weeks ended June 29, 2010	31.2	%
Other restaurant operating expenses as a percentage of net product sales for the 13 weeks ended September 28, 2010	33.7	%
Deleveraging of rent and occupancy costs	0.3
Depreciation expense	(0.3	)
Increased delivery driver reimbursements due to higher fuel costs	0.2
Decreased restaurant manager bonuses	(0.2	)
Other expenses, net	0.1
Miscellaneous income	(0.2	)
Other restaurant operating expenses as a percentage of net product sales for the 26 weeks ended June 28, 2011	31.6	%
Various other expenses, net	(0.5	)
Other restaurant operating expenses as a percentage of net product sales for the 13 weeks ended September 27, 2011	32.5	%

AsThe afavorable ~~percentage~~variance ofwas ~~net~~largely ~~product sales, fixed and semi-fixed costs, primarily occupancy costs, increased~~ due to ~~deleveraging~~lower ofdepreciation ~~these~~expense, ~~fixed expenses as a result of~~ lower ~~comparable store sales. Lower~~ restaurant manager ~~bonuses~~bonus expense ~~were~~and ~~offset~~miscellaneous byincome ~~increased~~from ~~delivery~~business ~~driver~~interruption ~~reimbursement~~and ~~expenses~~reparation ~~largely due to higher fuel costs~~proceeds.

Depreciation expense for store operations was $157.68 million or 3.34% of net product sales for the 26third ~~weeks~~quarter ~~ended~~of ~~June 28,~~ 2011 compared to $168.14 million or 3.37% of net product sales for the prior year.

General and Administrative Expenses. General and administrative expenses for the 26third ~~weeks~~quarter ~~ended~~of ~~June 28,~~ 2011 were $2613.31 million compared to $2411.49 million for the ~~prior~~third ~~year~~quarter of 2010, an increase of $1.92 million or 710.72%. This increase was largely due to the reinstatement of certain employee related incentive compensation ~~expenses~~programs and ~~higher~~increased ~~field~~credit ~~training~~card ~~costs~~transaction fees.

Corporate Depreciation and Amortization. Corporate depreciation and amortization costs were $53.91 million and $52.79 million for the third 26quarter ~~weeks~~of ~~ended June 28,~~ 2011 and ~~June 29,~~ 2010, respectively.

Other. We recorded other expense of $0.69 million and $.0.83 million ~~for~~ during the ~~year-to-date~~third ~~periods~~quarter of 2011 and 2010, respectively. During the third quarter of 2011, ~~for~~we ~~other~~recorded $0.8 million for expenses ~~which~~incurred ~~were~~in ~~primarily~~connection with strategic alternatives considered by the Company and $0.1 million for casualty losses, as compared to $0.3 million in the prior year for facility impairment charges.

Interest Expense. Interest expense was $126.91 million for the 26third ~~weeks~~quarter ~~ended~~of ~~June 28,~~ 2011 compared to $147.9 3 million for the prior year, a decrease of $21.02 million due to lower average ~~outstanding~~ debt ~~balances~~outstanding and lower interest rates as compared to the prior year. Our average outstanding debt balance decreased $29.7 million to $372.7 million for the third quarter of 2011 as compared to the same period last year and our cash borrowing rate decreased 0.7% to 5.8% for the third quarter of 2011 as compared to the prior year. Interest expense included $0.6 million for amortization of deferred debt issuance costs in both the third quarter 2011 and 2010.

Income Taxes. For the third quarter of 2011, we recorded an income tax benefit of $0.5 million compared to an income tax benefit of $0.2 million for the third quarter of 2010. During the third quarter 2011, the anticipated effective annual tax rate was decreased by six percentage points to 21.1% due to revised projected taxable income for the fiscal year which resulted in a third quarter 2011 tax benefit. The income tax benefit for the third quarter of 2010 was largely due to a favorable discrete tax adjustment of $1.5 million related to the release of liabilities for uncertain tax positions partially offset by tax expense for the quarter of $1.3 million.

~~compared~~Net ~~to the prior year~~Income. ~~Our~~Net ~~average~~income ~~outstanding debt balance decreased $35.9 million to $382.1 million~~ for both the 26third ~~weeks~~quarter ~~ended~~of ~~June 28,~~ 2011 asand ~~compared~~2010 towas $~~418~~3.05 million ~~in the prior~~. ~~year~~Increased ~~and~~net ~~our~~sales, ~~cash~~lower ~~borrowing~~direct ~~rate~~labor ~~decreased~~costs, ~~0.3%~~other torestaurant ~~6.1%~~operating ~~for~~and ~~the~~interest 26expenses ~~weeks~~were ~~ended~~more ~~June 28,~~than ~~2011~~offset asby ~~compared~~higher toingredient ~~the~~costs ~~prior~~and ~~year.~~increased ~~Interest~~general ~~expense~~and ~~included~~administrative ~~$1.3~~expenses, ~~million~~which ~~for~~resulted ~~amortization~~in ofa ~~deferred~~slight ~~debt~~decrease ~~issuance~~in ~~costs~~net ~~for~~income ~~both~~as compared to the 26prior ~~week periods of 2011 and 2010~~year.

~~Income~~Thirty-Nine ~~Taxes.~~Weeks ~~For~~Ended ~~the 26 weeks ended June~~September 2827, 2011, weCompared ~~recorded income tax expense of $5.3 million which resulted in an effective income tax rate of 26.6% compared~~ to ~~an effective tax rate of 24.6%~~September 28, or2010 ~~$4.8 million, for the prior year. The lower than statutory rates for both years were due to the impact of tax credits in relation to income before taxes.~~

Net ~~Income~~Product Sales. Net ~~income~~product sales for the 2639 weeks ended ~~June~~September 2827, 2011 ~~was~~were $14695.7 million compared to $14715.~~6 million~~3 million for the ~~prior~~same ~~year.~~period ~~Restaurant~~of ~~operating~~2010, ~~margins~~a ~~increased~~decrease byof $019.16 million, ~~for~~or ~~the~~2.7%, ~~second~~resulting ~~quarter~~largely offrom ~~2011~~a ~~compared~~comparable tostore ~~the prior year despite decreased net product~~ sales ~~due~~decrease toof ~~higher~~2.5% ~~net~~and ~~pricing~~a ~~from~~0.8% ~~our~~decrease ~~simplified~~in ~~pricing strategy~~equivalent ~~and~~units ~~other~~for ~~promotional activity introduced during~~ the ~~quarter~~39 ~~and~~weeks ~~lower~~ended ~~direct~~September 27, ~~labor~~2011, ~~costs~~rolling ~~from~~over ~~cost~~last ~~management~~year’s comparable ~~strategies~~store ~~implemented~~sales byincrease ~~management~~of ~~nearly~~10.5%. ~~offset~~The bydecline ~~higher~~in ~~ingredient~~comparable ~~costs~~store ~~and~~sales ~~higher~~results ~~delivery~~is ~~expenses.~~largely ~~General & administrative expenses increased~~ due to ~~the~~rolling ~~reinstatement~~over ofthe ~~incentive~~significant ~~compensation~~growth ~~programs,~~derived ~~which~~from ~~was~~our ~~more~~$10 ~~than~~Any ~~offset~~Pizza bypromotion ~~lower~~offered ~~interest~~for ~~expense,~~the ~~which~~first ~~resulted~~half inof ~~an increase in consolidated net income as compared to the prior year~~2010.

Fees and Other Income. Fees and other income were $31.9 million for the 39 weeks ended September 27, 2011, compared to $33.1 million for the prior year, for a decrease of $1.2 million or 3.7%. The decrease was due to lower customer delivery charge income from decreased delivery transactions.

Cost of Sales. Cost of sales was $209.2 million for the 39 weeks ended September 27, 2011, compared to $213.8 million for the prior year for a decrease of $4.5 million or 2.1%. Cost of sales increased 0.2%, as a percentage of net product sales, to 30.1%, compared to 29.9% in the prior year. This increase was largely due to higher ingredient costs, primarily cheese, dough and meat. Partially offsetting these increases for 2011 were higher net pricing and product mix changes reducing both pizza size (medium instead of large) and the number of toppings (3 toppings or less) as a result of simplified pricing and other product promotions compared to the $10 Any Pizza promotion, which was offered in the first half of the prior year and resulted in increased sales of large and specialty (3+ topping) pizzas.

Direct Labor. Direct labor costs for the 39 weeks ended September 27, 2011 as compared to the prior year were $204.3 million and $214.9 million, respectively, a decrease of $10.6 million, or 4.9%. Direct labor costs were 29.4% of net product sales for the 39 weeks ended September 27, 2011, a 0.6% decrease compared to the prior year. The favorable variance was primarily due to lower average wage rates realized from the labor optimization strategies and change in pay practices of certain team members implemented at the beginning of fiscal 2011, and improved labor efficiencies.

Other Restaurant Operating Expenses. Other restaurant operating expenses for the 39 weeks ended September 27, 2011 as compared to the prior year were $222.1 million and $229.0 million, respectively, a decrease of $6.9 million, or 3.0%. Other operating expenses were 31.9% of net product sales for the 39 weeks ended September 27, 2011 compared to 32.0% of net product sales for the prior year, a decrease of 0.1%.

The changes in the other restaurant operating expenses as a percentage of net product sales are explained as follows:


Other restaurant operating expenses as a percentage of net product sales for the 39 weeks ended September 28, 2010	32.0	%
Deleveraging of rent and occupancy costs	0.2
Decreased restaurant manager bonuses	(0.2	)
Other expenses, net	(0.1	)

Other restaurant operating expenses as a percentage of net product sales for the 39 weeks ended September 27, 2011	31.9	%

As a percentage of net product sales, lower restaurant manager bonuses and other net expenses were partially offset by increased fixed and semi-fixed costs, primarily occupancy costs, due to deleveraging of these fixed expenses as a result of lower comparable store sales.

Depreciation expense for store operations was $23.4 million or 3.4% of net product sales for the 39 weeks ended September 27, 2011 compared to $24.5 million or 3.4% of net product sales for the prior year.

General and Administrative Expenses. General and administrative expenses for the 39 weeks ended September 27, 2011 were $39.4 million compared to $36.3 million for the prior year, an increase of $3.1 million or 8.5%. This increase was largely due to the reinstatement of certain employee related compensation expenses, higher field training costs and increased credit card transaction fees.

Corporate Depreciation and Amortization. Corporate depreciation and amortization costs were $9.0 million and $8.6 million for the 39 weeks ended September 27, 2011 and September 28, 2010, respectively.

Other. We recorded other expense of $1.5 million and $1.1 million for the 39 weeks ended September 27, 2011 and September 28, 2010, respectively. During the year-to-date period of 2011, we recorded $0.8 million for expenses incurred in connection with strategic alternatives considered by the Company and $0.7 million for facility impairment charges compared to $1.2 million in the prior year for facility impairment charges.

Interest Expense. Interest expense was $19.1 million for the 39 weeks ended September 27, 2011 compared to $22.2 million for the prior year, a decrease of $3.1 million due to lower average outstanding debt balances and lower interest rates as compared to the prior year. Our average outstanding debt balance decreased $33.9 million to $378.9 million for the 39 weeks ended September 27, 2011 as compared to $412.8 million in the prior year and our cash borrowing rate decreased 0.5% to 6.0% for the 39 weeks ended September 27, 2011 as compared to the prior year. Interest expense included $1.9 million for amortization of deferred debt issuance costs for both the 39 week periods of 2011 and 2010.

Income Taxes. For the 39 weeks ended September 27, 2011, we recorded income tax expense of $4.8 million which resulted in an effective income tax rate of 21.1% compared to an effective tax rate of 20.1%, or $4.5 million, for the prior year. The lower than statutory rates for both years were due to the impact of tax credits in relation to income before taxes.

Net Income. Net income for both the 39 week periods ended September 27, 2011 and September 28, 2010, respectively, was $18.1 million. Lower net sales and increased general and administrative expenses were more than offset by direct labor cost savings, decreased cost of sales, other restaurant operating and interest expenses resulting in a slight increase in net income as compared to the prior year.

Liquidity and Sources of Capital

Our short-term and long-term liquidity needs will arise primarily from: (1) interest and principal payments related to our existing credit facility and the senior subordinated notes; (2) capital expenditures, including new unit development, asset development including those for our re-imaging plan, and maintenance capital expenditures; (3) opportunistic acquisitions of Pizza Hut restaurants or other acquisition opportunities; and (4) working capital requirements as may be needed to support our business. We intend to fund our operations, interest expense, capital expenditures, acquisitions and working capital requirements principally from cash from operations, cash reserves and borrowings on our revolving credit facility. Future acquisitions, depending on the size, may require borrowings beyond those available on our existing revolving credit facility and therefore may require further utilization of the additional remaining term loan borrowing capacity under our credit facility described below as well as other sources of debt or additional equity capital.

Our working capital was ~~a deficit of~~ $52.15 million at ~~June~~September 2827, 2011. Like many other restaurant companies, we are able to operate and generally do operate with a working capital deficit. Weor ~~are~~minimal ~~able to~~positive ~~operate with a~~ working capital ~~deficit~~ because (i) restaurant revenues are received primarily in cash or by credit card with a low level of accounts receivable; (ii) rapid turnover results in a limited investment in inventories; and (iii) cash from sales is usually received before related liabilities for food, supplies and payroll become due. Because we are able to operate with aminimal working capital or a deficit, we have historically utilized excess cash flow from operations and our revolving line of credit for debt reduction, capital expenditures and acquisitions, and to provide liquidity for our working capital needs. At ~~June~~September 2827, 2011, we had $57.3 million of borrowing capacity available under our revolving line of credit net of $17.7 million of outstanding letters of credit.

Cash flows from operating activities

Cash from operations is our primary source of funds. Changes in earnings and working capital levels are the two key factors that generally have the greatest impact on cash from operations. Our operating activities provided net cash inflows of $4468.74 million for the 2639 weeks ended ~~June~~September 2827, 2011 compared to $5069.10 million for 2010. ~~Cash~~The decrease in cash flows from operations ~~during~~as ~~the~~compared ~~first half~~to ofthe ~~2011~~prior ~~were~~year ~~negatively~~was ~~impacted~~primarily bydue to a $100.34 million decrease ~~from~~in ~~net~~ changes in ~~working~~assets ~~capital,~~and liabilities largely due to the timing of payroll and the change in current income taxes., ~~This decrease was~~ partially offset by ~~the~~a ~~$3.6 million~~ positive ~~impact~~ ofchange ~~after~~in ~~tax~~other ~~cash~~assets ~~flows~~and ~~from~~deferred ~~operations (after adding back non-cash~~ items ~~to net income) as compared to the prior year~~.

Cash flows from investing activities

Cash flows used in investing activities were $817.1 million during the 2639 weeks ended ~~June~~ September 2827, 2011 compared to $611.68 million for the prior year. For the ~~first~~39 ~~half~~weeks of 2011, we invested $817.78 million in capital expenditures, including the development of 17 new Delco units and 2 relocation Delco Units, compared to $813.69 million in the prior year. Additionally, in ~~the first half of~~ 2011 we received proceeds of $0.6 for ~~assets~~asset sales compared to $2.1 million in the prior year for asset sales as a result of PHI’s ~~exercised~~exercise ~~the~~of its option to purchase five assets which were part of the fiscal 2008 and 2009 sale transactions.

~~Cash~~20 ~~flows from financing activities~~

Net cash outflows for financing activities were $29.2 million for the 26 weeks ended June 28, 2011 compared to $31.4 million for 2010. During the first quarter of 2011, we paid our mandatory excess cash flow prepayment of $29.7 million on our senior secured credit facility utilizing cash reserves compared to $31.3 million during the first quarter of 2010. During the first half of 2011 we completed a sale-leaseback transaction for one property for $0.5 million.

Based upon the amount of excess cash flow generated during fiscal 2010 and the Company’s leverage at fiscal 2010 year end, each of which is defined in the credit agreement for our senior secured credit facility, the Company was required to make an excess cash flow mandatory prepayment of $29.7 million. This amount was included in the current portion of long-term debt at December 28, 2010 and was paid utilizing our cash reserves on February 24, 2011. We currently expect ~~that~~our wecapital ~~will~~expenditure beinvestment ~~required~~ to ~~make~~be aapproximately ~~similar payment in 2012 of between~~ $1136 million ~~and~~to $1440 million ~~depending~~in ~~upon the amount of excess cash flow generated during the~~ fiscal ~~year and our leverage at fiscal year-end~~2012. AsThis ~~this is a preliminary~~ estimate, ~~the~~includes ~~final excess cash flow mandatory prepayment could ultimately differ materially from~~ the ~~amounts~~development ~~reflected above and as such we have not reflected any~~ of ~~this~~40 ~~estimate~~to as50 anew ~~current~~Delco ~~liability~~units.

AsCash ~~of June 28,~~flows ~~2011, we were in compliance with all of the financial covenants under our senior secured credit facility. Further, as shown in the following table, our financial leverage ratio has declined~~ from ~~3.80x~~financing ~~at fiscal 2010 year end to 3.56x~~activities as of June 28, 2011 as a result of our $29.7 million payment on our senior secured credit facility and improved operating results. Our ratios under the foregoing financial covenants in our credit agreement as of June 28, 2011 were as follows:

	Actual		Covenant Requirement
Maximum leverage ratio		3.56x	Not more than 4.25x
Minimum interest coverage ratio		2.06x	Not less than 1.75x

Net cash used in financing activities was $29.2 million for the 39 weeks ended September 27, 2011 compared to $30.5 million for 2010. During the first quarter of 2011, we paid our mandatory excess cash flow prepayment of $29.7 million on our senior secured credit facility utilizing cash reserves compared to a prepayment of $31.3 million made during the first quarter of 2010. During 2011 we completed a sale-leaseback transaction for one property for $0.5 million.

Based upon the amount of excess cash flow generated during fiscal 2010 and the Company’s leverage at fiscal 2010 year end, each of which is defined in the credit agreement for our senior secured credit facility, the Company was required to make an excess cash flow mandatory prepayment of $29.7 million. This amount was included in the current portion of long-term debt at December 28, 2010 and was paid utilizing our cash reserves on February 24, 2011. We currently expect that we will be required to make a similar payment in 2012 of between $20 million and $24 million depending upon the amount of excess cash flow generated during the fiscal year and our leverage at fiscal year-end. As this is a preliminary estimate, the final excess cash flow mandatory prepayment could ultimately differ materially from the amounts reflected above and as such we have not reflected any of this as a current liability.

As of September 27, 2011, we were in compliance with all of the financial covenants under our senior secured credit facility. Further, as shown in the following table, our financial leverage ratio has declined from 3.80x at fiscal 2010 year end to 3.60x as of September 27, 2011 as a result of our $29.7 million payment on our senior secured credit facility and improved operating results. Our ratios under the foregoing financial covenants in our credit agreement as of September 27, 2011 were as follows:

The credit agreement defines “Leverage Ratio” as the ratio of Consolidated Debt for Borrowed Money to Consolidated EBITDA; “Consolidated Interest Coverage Ratio” is defined as the ratio of (x) Consolidated EBITDA plus Rent Expense to (y) Consolidated Interest Expense plus Rent Expense. All of the foregoing capitalized terms are defined in the Credit Agreement, which was filed with the Securities and Exchange Commission on October 31, 2006 as Exhibit 10.2 to the Company’s Registration Statement on Form S-4 (File No 333-138338). The Credit Agreement provides that each of the above defined terms include the pro forma effect of acquisitions and divestitures on a full year basis. This pro forma effect used in connection with the financial debt covenant ratio calculations is not the same calculation we use to determine Adjusted EBITDA, which we disclose to investors in our earnings releases and which is discussed below.

Based upon current operations, we believe that our cash flows from operations, together with cash reserves and borrowings that are available under the revolving credit facility portion of our senior secured credit facility, will be adequate to meet our anticipated requirements for working capital, capital expenditures, and scheduled principal and interest payments through the next 12 months. Our $75.0 million revolving credit facility is due May 3, 2012, ~~and~~ our ~~$300.0 million~~ term loan notes are due May 3, 2013 and our senior subordinated notes are due May 1, 2014. Any additional debt incurred, beyond the parameters established in our current credit agreement, or refinancing of any of our existing indebtedness may result in increased borrowing costs that are in excess of our current borrowing costs based on current credit market conditions. Although we do not currently anticipate any problems in obtaining financing due to our historical results of operations and our generation of free cash flow, adverse changes in business or credit market conditions in the future could materially adversely affect our ability to refinance the existing indebtedness on reasonable terms. We will continue to evaluate the credit markets as we assess the future potential refinancing of our existing credit facility and our acquisition and other growth opportunities.

At ~~June~~September 2827, 2011, we had $57.3 million of borrowing capacity available under our revolving line of credit net of $17.7 million of outstanding letters of credit. We will consider additional sources of financing to fund our long-term growth if necessary, including the remaining $60.0 million of term loan capacity available under our existing credit facility.

Non-GAAP measures

Non-GAAP Adjusted EBITDA (“Adjusted EBITDA”) is a supplemental measure of our performance that is not required by or presented in accordance with GAAP. We have included Adjusted EBITDA as a supplemental disclosure because we believe that Adjusted EBITDA provides investors a helpful measure for comparing our operating performance with the performance of other companies that have different financing and capital structures or tax rates. We have substantial interest expense relating to the financing of the 2006 acquisition of us and substantial depreciation and amortization expense relating to this transaction and to our acquisitions of units in recent years. We believe that the elimination of these items, as well as taxes, pre-opening and other expenses and facility impairment charges give investors useful information to compare the performance of our core operations over different periods. The following is a reconciliation of net income to Adjusted EBITDA(1) (in thousands).

2021

	13 Weeks Ended				26 Weeks Ended
	June 28, 2011		June 29, 2010		June 28, 2011		June 29, 2010
Net income from continuing operations	$	5,150	$	5,120	$	14,656	$	14,580
Adjustments:
Interest expense		6,195		7,349		12,944		14,874
Income tax expense		1,063		1,482		5,318		4,759
Depreciation and amortization		11,096		11,100		22,867		22,523
Net facility impairment charges		631		437		710		844
Pre-opening expenses and other		317		224		556		508
Adjusted EBITDA	$	24,452	$	25,712	$	57,051	$	58,088

with the performance of other companies that have different financing and capital structures or tax rates. We have substantial interest expense relating to the financing of the 2006 acquisition of us and substantial depreciation and amortization expense relating to this transaction and to our acquisitions of units in recent years. We believe that the elimination of these items, as well as taxes, pre-opening and other expenses and facility impairment charges give investors useful information to compare the performance of our core operations over different periods. The following is a reconciliation of net income to Adjusted EBITDA⁽¹⁾ (in thousands).


	13 Weeks Ended						39 Weeks Ended
	Sept. 27, 2011			Sept. 28, 2010			Sept. 27, 2011		Sept. 28, 2010
Net income	$	3,469		$	3,489		$	18,125	$	18,069
Adjustments:
Interest expense		6,131			7,278			19,075		22,152
Income tax (benefit) expense		(480	)		(222	)		4,838		4,537
Depreciation and amortization		11,124			11,694			33,991		34,217
Net facility impairment charges		—			339			710		1,183
Pre-opening expenses and other		1,290			267			1,846		775

Adjusted EBITDA	$	21,534		$	22,845		$	78,585	$	80,933

⁽¹⁾

The Company defines Adjusted EBITDA as consolidated net income plus interest, income taxes, depreciation and amortization, facility impairment charges and pre-opening expenses. Adjusted EBITDA is not a measure of financial performance under generally accepted accounting principles. Adjusted EBITDA has limitations as an analytical tool, and should not be considered in isolation from, or as a substitute for analysis of, the Company’s financial information reported under generally accepted accounting principles. Adjusted EBITDA as defined above may not be similar to EBITDA measures of other companies.

Letters of Credit

As of ~~June~~September 2827, 2011, we had letters of credit of $17.7 million issued under our existing credit facility in support of self-insured risks.

2122

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

We are exposed to various market risks. Market risk is the potential loss arising from adverse changes in market prices and rates. We do not enter into derivative or other financial instruments for trading or speculative purposes.

Interest Rate Risk. Our primary market risk exposure is interest rate risk. All of our borrowings under our senior secured credit facility bear interest at a floating rate. As of ~~June~~September 2827, 2011, we had $197.7 million in funded floating rate debt outstanding under our senior secured credit facility. We have interest rate ~~swap~~ swap agreements that provide for fixed rates as compared to the three-month LIBOR rate on the following notional ~~amounts~~amount of floating rate debt at ~~June~~September 2827, 2011:


Effective Date	Notional Amount (in millions)		Fixed Rate Paid		Maturity Date
Nov. 18, 2008	$	30.0		2.81%	Nov. 18, 2011

After giving effect to ~~these~~this ~~swaps~~swap, which leaves us with $167.7 million of floating rate debt, a 100 ~~basis~~ basis point increase in this floating rate would increase annual interest expense by approximately $1.7 million.

Commodity Prices. Commodity prices such as cheese can vary. The price of this commodity can change throughout the year due to changes in supply and demand. Cheese has historically represented approximately 30-35% of our cost of sales. We are a member of the UFPC, and participate in cheese hedging programs that are directed by the UFPC to help reduce the volatility of this commodity from period-to-period. Based on information provided by the UFPC, the UFPC expects to hedge approximately 30% to 50% of the Pizza Hut system’s anticipated cheese purchases through a combination of derivatives taken under the direction of the UFPC.

The estimated increase in our food costs from a hypothetical 10% adverse change in the average cheese block price per pound (approximately $0.1820 per pound for the 2639 weeks ended ~~June~~September 2827, 2011 ~~and~~ and $0.1417 per pound for 2010) would have been approximately $48.23 million and $25.79 million for the 13 weeks ended ~~June~~September 2827, 2011 and ~~June~~September 2928, 2010, respectively, without giving effect to the UFPC directed hedging programs.

Item 4.

Controls and Procedures.

Evaluation of Disclosure Controls and Procedures.

As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures, as such term is defined in Rule 15d-15(e) of the Securities Exchange Act of 1934, as amended (“Exchange Act”). Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of such date to provide reasonable assurance that the information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Changes in internal control over financial reporting. There has been no change in our internal control over financial reporting that occurred during our ~~second~~third fiscal quarter of 2011 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

2223

PART II. OTHER INFORMATION

Item 1.

Legal Proceedings.

On March 28, 2011, the court granted conditional collective action certification under the FLSA. Unlike a class action, a collective action requires potential class members to “opt in” rather than “opt out.” On April 27, 2011, a third-party administrator mailed a notice to approximately 33,615 potential opt-ins. On or about July 15, 2011, the third-party administrator mailed a notice to an additional 5,682 potential opt-ins. The opt-in period for the first group closed on July 26, 2011. The period for the second group of opt-ins ~~will~~closed ~~close~~ on or about October 11, 2011. As of ~~July 28~~ October 12, 2011, approximately 45,~~414~~588 opt-in notices have been returned. The parties have not yet briefed whether each notice was timely filed and reflects eligible drivers.

On July 22, 2011, plaintiffs’ filed a Rule 23 motion, seeking certification of a class of delivery drivers in each of the following eight states in which the state minimum wage is higher than the federal minimum wage: Arkansas, Colorado, Florida, Illinois, Iowa, Missouri, Oregon and Washington. Because Plaintiffs have moved for certification under Rule 23, the classes they seek would be opt-out classes. On September 21, 2011, NPC filed its opposition to plaintiffs’ Rule 23 motion. Plaintiffs’ filed their reply on October 21, 2011.

Item 1A.

Risk Factors.

There have been no material changes in our risk factors from those disclosed in our 2010 Form 10-K.

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds.

Not applicable.

Item 3.

Defaults Upon Senior Securities.

Not applicable.

Item 4.

Removed and Reserved.

Item 5.

Other Information.

Not applicable.

2324

Item 6.

Exhibits, Financial Statement Schedules

Pursuant to the rules and regulations of the Securities and Exchange Commission, we have filed, furnished or incorporated by reference the documents referenced below as exhibits to this Form 10-Q. The ~~documents~~ documents include certain agreements to which the Company is a party or has a beneficial interest. The agreements have been filed to provide investors with information regarding their respective terms. The agreements are not intended to provide any other factual information about the Company or its business or operations. In particular, the assertions embodied in any representations, warranties and covenants contained in the agreements may be subject to qualifications with respect to knowledge ~~and~~ and materiality different from those applicable to investors and may be qualified by information in confidential disclosure schedules not included with the exhibits. These disclosure schedules may contain information that modifies, qualifies and ~~creates~~ creates exceptions to the representations, warranties and covenants set forth in the agreements. Moreover, certain representations, warranties and covenants in the agreements may have been used for the purpose of allocating risk between the parties, ~~rather~~ rather than establishing matters as facts. In addition, information concerning the subject matter of the representations, warranties and covenants may have changed after the date of the respective agreement, which subsequent information may or may not be fully reflected in the Company’s public disclosures. Accordingly, investors should not rely on the representations, warranties and covenants in the agreements as characterizations of the actual state of facts about the Company or its ~~business~~ business or operations on the date hereof.

The exhibits that are required to be filed, furnished or incorporated by reference herein are listed in the Exhibit Index below (following the signatures page of this report).

2425

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized, on ~~August~~November 27, 2011.


NPC INTERNATIONAL, INC.

By:		/s/ Troy D. Cook
Name:		Troy D. Cook
Title:		Executive Vice President—Finance, Chief Financial Officer, Secretary and Treasurer (Principal Financial Officer)

By:		/s/ Susan G. Dechant
Name:		Susan G. Dechant
Title:		Vice President—Administration and Chief Accounting Officer (Principal Accounting Officer)

2526

Exhibit Index


Exhibit No.		Document Description
2.1*		Stock Purchase Agreement dated as of March 3, 2006 among NPC Acquisition Holdings, LLC, NPC International, Inc. and the stockholders of NPC International, Inc. named therein

2.2*		Merger Agreement dated as of May 3, 2006 between Hawk-Eye Pizza, LLC and NPC Management, Inc.

2.3		Asset Sale Agreement by and between NPC International, Inc., Pizza Hut of America, Inc. and Pizza Hut, Inc. dated as of November 3, 2008 (incorporated herein by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed with the Commission on December 9, 2008)

2.4		Asset Purchase and Sale Agreement by and between NPC International, Inc., Pizza Hut of America, Inc. and Pizza Hut, Inc. dated as of November 3, 2008 (incorporated herein by reference to Exhibit 2.2 to the Company’s Current Report on Form 8-K filed with the Commission on December 9, 2008)

2.5		Amendment to Asset Sale Agreement dated as of December 8, 2008 among NPC International, Inc., Pizza Hut of America, Inc. and Pizza Hut, Inc. (incorporated herein by reference to Exhibit 2.3 to the Company’s Current Report on Form 8-K filed with the Commission on December 9, 2008)

2.6		Amendment to Asset Purchase and Sale Agreement dated as of December 8, 2008 among NPC International, Inc., Pizza Hut of America, Inc. and Pizza Hut, Inc. (incorporated herein by reference to Exhibit 2.4 to the Company’s Current Report on Form 8-K filed with the Commission on December 8, 2008)

2.7		Asset Purchase and Sale Agreement by and between NPC International, Inc., Pizza Hut of America, Inc. and Pizza Hut, Inc. dated as of December 15, 2008 (incorporated herein by reference to Exhibit 2.5 to the Company’s Current Report on Form 8-K filed with the Commission on January 20, 2009)

2.8		Asset Sale Agreement by and between NPC International, Inc., Pizza Hut of America, Inc. and Pizza Hut, Inc. dated as of January 13, 2009 (incorporated herein by reference to Exhibit 2.6 to the Company’s Current Report on Form 8-K filed with the Commission on February 17, 2009)

2.9		Amendment to Asset Sale Agreement dated as of February 12, 2009 between NPC International, Inc., Pizza Hut of America, Inc. and Pizza Hut, Inc. (incorporated herein by reference to Exhibit 2.7 to the Company’s Current Report on Form 8-K filed with the Commission on February 17, 2009)

2.10		Second Amendment to Asset Sale Agreement dated as of February 16, 2009 between NPC International, Inc., Pizza Hut of America, Inc. and Pizza Hut, Inc. (incorporated herein by reference to Exhibit 2.8 to the Company’s Current Report on Form 8-K filed with the Commission on February 17, 2009)

3.1*		Amended and Restated Articles of Incorporation of NPC International, Inc.

3.2*		Bylaws of NPC International, Inc.

4.1*		Indenture dated as of May 3, 2006 among NPC International, Inc., NPC Management, Inc. and Wells Fargo Bank, National Association, related to the issue of the 9 1/2% Senior Subordinated Notes due 2014

4.2*		Form of 9 1/2% Senior Subordinated Note due 2014 (included in Exhibit 4.1)

4.3*		Registration Rights Agreement dated as of May 3, 2006 among NPC International, Inc., NPC Management, Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated and J.P. Morgan Securities Inc.

10.1*		Hawk-Eye Interests Purchase Agreement, dated as of May 3, 2006, among NPC International, Inc., Oread Capital Holdings, LLC and Troy D. Cook

10.2*		Credit agreement dated as of May 3, 2006 among NPC International, Inc., NPC Acquisition Holdings, LLC as a Guarantor, the other Guarantors party thereto, JPMorgan Chase Bank, N.A., as Administrative Agent, Collateral Agent and Issuing Bank, Merrill Lynch, Pierce, Fenner & Smith Incorporated, as Syndication Agent, Bank of America, N.A. and Sun Trust Bank, as Co-Documentation Agents, and the Lenders signatory thereto

10.4*		Advisory Agreement, dated as of May 3, 2006, among NPC International, Inc., NPC Acquisition Holdings, LLC and Merrill Lynch Global Partners, Inc.

10.7*		NPC International, Inc. Deferred Compensation and Retirement Plan

Exhibit No.		Document Description
10.8*		NPC International, Inc. POWR Plan for Key Employees
10.9*		Form of Location Franchise Agreement dated as of January 1, 2003 between Pizza Hut, Inc. and NPC Management, Inc.
10.10*		Form of Territory Franchise Agreement dated as of January 1, 2003 between Pizza Hut, Inc. and NPC Management, Inc.
10.11*		Purchase Agreement and Escrow Instructions dated as of August 26, 2006 between Realty Income Corporation and NPC International, Inc.
10.12*		Purchase Agreement dated as of April 25, 2006 among Merrill Lynch & Co. and J.P. Morgan Securities Inc., as representative for the initial purchasers, NPC International, Inc, and NPC Management, Inc.
10.13		Pizza Hut National Purchasing Coop, Inc. Membership Subscription and Commitment Agreement (incorporated herein by reference to Exhibit 10.32 to the Registrant’s Annual Report on Form 10-K filed with the Commission on May 28, 1999 (File No. 0-13007))
10.14*		ISDA Master Agreement dated as of June 6, 2006 between Merrill Lynch Capital Services, Inc. and NPC International, Inc.
10.15		NPC Acquisition Holdings, LLC Management Option Plan (including forms of executive and director option agreements) dated January 24, 2007 (incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Commission on January 25, 2007)
10.16		Amendment to Franchise Agreement dated as of December 25, 2007 between Pizza Hut, Inc. and NPC International, Inc. (incorporated herein by reference as Exhibit 10.16 to the Company’s Annual Report on Form 10-K filed with the Commission on March 14, 2008)
10.17		Swap Transaction Confirmation dated March 31, 2008 between Merrill Lynch Capital Services, Inc. and NPC International, Inc. (incorporated herein by reference to Exhibit 10.17 to the Company’s Quarterly Report on Form 10-Q filed with the Commission on May 9, 2008)
10.22		Restricted Common Unit Bonus Award Agreement dated May 5, 2010 between NPC Acquisition Holdings, LLC and James K. Schwartz (incorporated herein by reference to Exhibit 10.22 to the Company’s Quarterly Report on Form 10-Q filed with the Commission on August 6, 2010)
10.23**		Master Distribution Agreement between Unified Foodservice Purchasing Co-op, LLC, for and on behalf of itself as well as the Participants, as defined therein (including certain subsidiaries of Yum! Brands, Inc.) and McLane Foodservice, Inc., effective as of January 1, 2011 and Participant Distribution Joinder Agreement with McLane Foodservice, Inc. dated August 11, 2010 (incorporated herein by reference to Exhibit 10.23 to the Company’s Quarterly Report on Form 10-Q filed with the Commission on November 8, 2010)
10.24		Amended and Restated Employment Agreement, dated as of February 16, 2011 among NPC International, Inc., NPC Acquisition Holdings, LLC and James K. Schwartz (incorporated herein by reference as Exhibit 10.24 to the Company’s Annual Report on Form 10-K filed with the Commission on February 21, 2011)
10.25		Amended and Restated Employment Agreement, dated as of February 16, 2011 among NPC International, Inc., NPC Acquisition Holdings, LLC and Troy D. Cook (incorporated herein by reference as Exhibit 10.25 to the Company’s Annual Report on Form 10-K filed with the Commission on February 21, 2011)
10.26		NPC International, Inc. Deferred Compensation and Retirement Plan as amended and restated effective March 1, 2011
14.1		Code of Business Conduct and Ethics (incorporated herein by reference to Exhibit 14.1 to the Company’s Annual Report on Form 10-K filed with the Commission on March 23, 2007)
31.1***		Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2***		Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1***		Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2***		Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101		Financial statements from the quarterly report on Form 10-Q of NPC International, Inc. for the quarter ended June 28, 2011, filed on August 2, 2011, formatted in XBRL: (i) the Consolidated Statements of Income, (ii) the Consolidated Balance Sheets, (iii) the Consolidated Statements of Stockholders’ Equity, (iv) the Consolidated Statements of Cash Flows and (v) the Notes to Condensed Consolidated Financial Statements tagged as blocks of text.


Exhibit No.		Document Description
10.8*		NPC International, Inc. POWR Plan for Key Employees

10.9*		Form of Location Franchise Agreement dated as of January 1, 2003 between Pizza Hut, Inc. and NPC Management, Inc.

10.10*		Form of Territory Franchise Agreement dated as of January 1, 2003 between Pizza Hut, Inc. and NPC Management, Inc.

10.11*		Purchase Agreement and Escrow Instructions dated as of August 26, 2006 between Realty Income Corporation and NPC International, Inc.

10.12*		Purchase Agreement dated as of April 25, 2006 among Merrill Lynch & Co. and J.P. Morgan Securities Inc., as representative for the initial purchasers, NPC International, Inc, and NPC Management, Inc.

10.13		Pizza Hut National Purchasing Coop, Inc. Membership Subscription and Commitment Agreement (incorporated herein by reference to Exhibit 10.32 to the Registrant’s Annual Report on Form 10-K filed with the Commission on May 28, 1999 (File No. 0-13007))

10.14*		ISDA Master Agreement dated as of June 6, 2006 between Merrill Lynch Capital Services, Inc. and NPC International, Inc.

10.15		NPC Acquisition Holdings, LLC Management Option Plan (including forms of executive and director option agreements) dated January 24, 2007 (incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Commission on January 25, 2007)

10.16		Amendment to Franchise Agreement dated as of December 25, 2007 between Pizza Hut, Inc. and NPC International, Inc. (incorporated herein by reference as Exhibit 10.16 to the Company’s Annual Report on Form 10-K filed with the Commission on March 14, 2008)

10.17		Swap Transaction Confirmation dated March 31, 2008 between Merrill Lynch Capital Services, Inc. and NPC International, Inc. (incorporated herein by reference to Exhibit 10.17 to the Company’s Quarterly Report on Form 10-Q filed with the Commission on May 9, 2008)

10.22		Restricted Common Unit Bonus Award Agreement dated May 5, 2010 between NPC Acquisition Holdings, LLC and James K. Schwartz (incorporated herein by reference to Exhibit 10.22 to the Company’s Quarterly Report on Form 10-Q filed with the Commission on August 6, 2010)

10.23**		Master Distribution Agreement between Unified Foodservice Purchasing Co-op, LLC, for and on behalf of itself as well as the Participants, as defined therein (including certain subsidiaries of Yum! Brands, Inc.) and McLane Foodservice, Inc., effective as of January 1, 2011 and Participant Distribution Joinder Agreement with McLane Foodservice, Inc. dated August 11, 2010 (incorporated herein by reference to Exhibit 10.23 to the Company’s Quarterly Report on Form 10-Q filed with the Commission on November 8, 2010)

10.24		Amended and Restated Employment Agreement, dated as of February 16, 2011 among NPC International, Inc., NPC Acquisition Holdings, LLC and James K. Schwartz (incorporated herein by reference as Exhibit 10.24 to the Company’s Annual Report on Form 10-K filed with the Commission on February 21, 2011)

10.25		Amended and Restated Employment Agreement, dated as of February 16, 2011 among NPC International, Inc., NPC Acquisition Holdings, LLC and Troy D. Cook (incorporated herein by reference as Exhibit 10.25 to the Company’s Annual Report on Form 10-K filed with the Commission on February 21, 2011)

10.26		NPC International, Inc. Deferred Compensation and Retirement Plan as amended and restated effective March 1, 2011

14.1		Code of Business Conduct and Ethics (incorporated herein by reference to Exhibit 14.1 to the Company’s Annual Report on Form 10-K filed with the Commission on March 23, 2007)

31.1***		Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2***		Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1***		Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2***		Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002


Exhibit No.		Document Description
101		Financial statements from the quarterly report on Form 10-Q of NPC International, Inc. for the quarter ended September 27, 2011, filed on November 7, 2011, formatted in XBRL: (i) the Consolidated Statements of Income (unaudited) for the 13 and 39 weeks ended September 27, 2011 and September 28, 2010, (ii) the Consolidated Balance Sheets (unaudited) at September 27, 2010 and December 28, 2010, (iii) the Consolidated Statements of Stockholders’ Equity (unaudited) for the 39 weeks ended September 27, 2011, (iv) the Consolidated Statements of Cash Flows (unaudited) for the 39 weeks ended September 27, 2011 and September 28, 2010 and (v) the Notes to Condensed Consolidated Financial Statements (unaudited) tagged as blocks of text.

*	Filed as an exhibit with corresponding number to the registrant’s registration statement on Form S-4 (File No 333-138338) and incorporated herein by reference

**	Portions of these documents have been omitted pursuant to a Request for Confidential Treatment filed with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. Omitted portions of these documents are indicated with an asterisk.

*** Filed or furnished herewith

2829

Actual

Covenant Requirement

Maximum leverage ratio

Not more than 4.25x

Minimum interest coverage ratio

Not less than 1.75x

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