PAPA JOHNS INTERNATIONAL INC (PZZA) FY 2024 MD&A

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Introduction and Overview

The following Management’s Discussion and Analysis (“MD&A”) should be read in conjunction with the Consolidated Financial Statements in Item 8. Financial Statements and Supplementary Data and the Risk Factors set forth in Item 1A. Risk Factors.

This section of this Annual Report on Form 10-K generally discusses fiscal 2024 and 2023 items and year-to-year comparisons between the years ended December 29, 2024 and December 31, 2023. Discussion of 2022 items and year-to-year comparisons between the years ended December 31, 2023 and December 25, 2022 that are not included in this Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023.

Our fiscal year ends on the last Sunday in December of each year. All fiscal years presented consist of 52 weeks except for the 2023 fiscal year, which consisted of 53 weeks.

Papa John’s International, Inc. (referred to as the “Company,” “Papa John’s,” “Papa Johns” or in the first-person notations of “we,” “us” and “our”) began operations in 1984. At December 29, 2024, there were 6,030 Papa Johns restaurants in operation, consisting of 552 Company-owned and 5,478 franchised restaurants. Our revenues are derived from retail sales of pizza and other food and beverage products to the general public by Company-owned restaurants, franchise royalties and sales of franchise and development rights. Additionally, we generate revenue from sales to franchisees of various items including food and paper products from our North America Quality Control Centers (“QC Centers”) and operation of our International QC Center in the United Kingdom, contributions received by Papa John’s Marketing Fund, Inc. (“PJMF”) which is our national marketing fund, and fees related to the use of information systems equipment as well as software and related services. We believe that in addition to supporting both Company and franchised profitability and growth, these activities contribute to product quality and consistency throughout the Papa Johns system.

Recent Developments and Trends

In 2024, the Company focused on strategic transformation priorities and building a foundation for long term success, while navigating a challenging macroeconomic environment. We continue to put our efforts and investments towards initiatives that improve our price/value perception and improve our digital and loyalty experience to increase conversion and reduce friction within the customer experience. Several key areas of focus include:

•Marketing strategy: In 2024 we activated a new marketing strategy that increased the PJMF contribution rate and made local marketing optional for franchisees, which became effective in the second quarter. This strategy shift was intended to increase the productivity of franchisees’ marketing contributions by leveraging the scale that national investments deliver. Additionally, in the first half of 2024 we launched a new brand campaign “Better Get You Some” that was part of our deepened commitment to, and investment in, our new marketing strategy. Our 2024 investments focused on improving audience segmentation, building consumer loyalty and driving cultural relevance. We also evolved our messaging and promotions to showcase our BETTER INGREDIENTS. BETTER PIZZA. at appropriately-valued price points to improve our overall value perception. We believe if we maintain an appropriate balance of value offerings and premium products, it will lead to improving sales trends over time. In 2025, we anticipate spending up to an additional $25 million in marketing investments, including investments in our customer relationship management platform and our loyalty program, when compared with 2024. This incremental spend will focus on ensuring a strong presence nationally as well as in key regional and local markets while leveraging our data to create more personalized offers for our customers.

•Digital and loyalty strategy: Most of our sales occur through digital channels and we are actively identifying opportunities for customers to more quickly access information, streamline the ordering journey and improve the overall user experience. In 2024, we focused on enhancing our mobile applications and website to improve call to actions and navigation, elevate imagery and more prominently feature our loyalty rewards program. In the fourth quarter, we also updated our loyalty program to allow members to unlock redeemable rewards in the form of “Papa Dough” faster, activating our members at higher rates to help drive transactions and frequency. We believe that converting points to Papa Dough in smaller increments to members can unlock rewards faster for more immediate customer gratification. In 2025, we will continue evolving our loyalty and digital experiences as they must be flexible and easy to understand to create strong, emotionally connected consumer engagement that seamlessly integrates with our creative, paid, earned and owned messaging.

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•Domestic commissary growth strategy: We are evolving our commissary business to drive profitable growth and overall supply chain productivity that provides cost savings and incremental profit for the system. Effective in the first quarter of 2024, we increased the fixed operating margin that Domestic QC Centers charge by 100 basis points, and we will continue to increase the margin by the same increment in each of the next three years, moving from 4% in 2023 to 8% in 2027. The increase to the fixed operating margin benefited North America Commissary revenue and operating income in 2024. To mitigate this cost for franchisees, we have offered new opportunities for franchisees to earn annual incentive-based rebates as they increase volume and open new restaurants. Franchisees who increase case-volume purchases at the highest volume growth could realize target market rates lower than the prior 4% rate. Additionally, we expect the incremental volume driven by increased marketing and additional development will reduce the shared supply chain costs across the system over time. Lastly, we will be focused on driving continued productivity throughout the supply chain through improved operations and supplier relationships.

•Development strategy: Development is a key long-term growth driver as we believe there is significant opportunity to offer our quality product to more customers globally and domestically. In 2024, we expanded our global footprint by 2.1%, with 124 net new units comprised of 81 net unit openings in North America and 43 net unit openings in International markets.

To pursue the opportunities we have identified in the United States and accelerate development, we introduced a new development incentive intended to deliver higher restaurant-level profit margins for new restaurants opened in 2024 through a waiver of PJMF contributions during the first five years of operations. We are also offering a three-year waiver of PJMF contributions for new restaurants opened in 2025. This incentive is intended to improve profitability for franchisees, add scale in key markets and attract growth-driven franchisees.

International Transformation Plan

In December 2023, the Company announced international transformation initiatives (“International Transformation Plan”) designed to evolve our business structure to deliver an enhanced value proposition to our International customers and franchisees, ensure targeted investments and efficient resource management, and better position certain international markets, including the United Kingdom, for long-term profitable growth and brand strength. Total estimated pre-tax costs associated with the International Transformation Plan are expected to be approximately $30 million to $35 million (inclusive of the $29.5 million incurred through December 29, 2024), the remainder of which we expect to be recognized in 2025. See “Note 16. Restructuring” of “Notes to Consolidated Financial Statements” for additional details.

During 2024, the Company made significant progress in executing the International Transformation Plan:

•We evaluated and optimized our restaurant portfolio in the UK, which resulted in the closure of 43 underperforming UK Company-owned restaurants and 30 franchised locations. We also completed the refranchising of 60 formerly Company-owned restaurants to primarily existing franchisees and continue to operate 13 Company-owned restaurants in the UK. We have completed substantially all of the strategic restaurant closures in the UK market and the Company’s efforts have turned towards growth opportunities and mitigating closure-related costs as we complete the optimization of the portfolio. We expect to complete the remaining aspects of the UK optimization plan during 2025.

•As a result of these actions, we saw year-over-year improvement in the profitability of the UK market in the third and fourth quarters, and we continue to optimize the region through exiting leases and other contracts as well as transforming our operations to increase efficiency and effectiveness.

•We established hubs for our key regions – APAC (Asia Pacific), EMEA (Europe, Middle East and Africa), and Latin America. These regional hubs are led by experienced General Managers and their teams that partner with franchisees to drive franchisee performance in their markets. These teams help align global best practices in operations, marketing and technology with local preferences to accomplish our long-term objective of increasing market share in key markets around the world.

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Presentation of Financial Results

Financial Statement Updates

The Company has implemented several financial statement changes in this Annual Report on Form 10-K, concurrent with the adoption of Accounting Standard Update (“ASU”) 2023-07, “Improvements to Reportable Segment Disclosures.” These changes evolve and modernize our financial statements and footnotes to increase transparency and better reflect management’s key performance metrics.

The Consolidated Statements of Operations have been reconfigured to classify revenues and expenses based on the nature of the underlying activities without regard to operating segment. This reconfiguration and the resulting reclassifications did not change previously reported Total revenues, Total costs and expenses, Operating income or Net income for any period. The Consolidated Statements of Cash Flows include reclassifications to a new line item that include the net operating cash flows of the consolidated advertising funds. The reclassifications did not change Net cash provided by operating activities, Net cash used in investing activities or Net cash used in financing activities for any period. Presentation changes to the Consolidated Statements of Operations and the Consolidated Statements of Cash Flows have been applied retrospectively, and as such, the results from the years ended December 31, 2023 and December 25, 2022 have been reclassified for consistency with the current year presentation.

Additionally, during the year ended December 29, 2024, the Company updated its internal cost allocation methodology to better reflect current levels of time and effort spent managing our different segments. These updates resulted in a higher allocation of previously unallocated corporate expenses to primarily the North America franchising and International segments. This update in methodology does not impact total reported expenses, and has been implemented prospectively beginning with the year ended December 29, 2024. The comparative information has not been restated.

Critical Accounting Policies and Estimates

The results of operations are based on our Consolidated Financial Statements, which were prepared in conformity with accounting principles generally accepted in the United States (“GAAP”). The preparation of Consolidated Financial Statements requires management to make estimates and judgments that affect the amounts reported in the Consolidated Financial Statements. A number of our significant accounting policies involve a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on our financial condition or results of operations. On an ongoing basis, our management evaluates its estimates, including those related to insurance reserves, long-lived assets, the allowance for credit losses on franchisee notes receivable, and income taxes. Actual results may differ from those estimates, and significant changes in assumptions and/or conditions in our critical accounting policies could materially impact our operating results. The Company’s significant accounting policies, including recently issued accounting pronouncements, are also described in “Note 2. Significant Accounting Policies” of “Notes to Consolidated Financial Statements.”

We believe that our most critical accounting estimates are:

Insurance Reserves

Our insurance programs for workers’ compensation, owned and non-owned automobiles, general liability and property insurance coverage are funded by the Company up to certain retention levels ranging up to $0.8 million. We record the liability for losses based upon undiscounted estimates of the liability for claims incurred and for events that have occurred but have not been reported using certain third-party actuarial projections and our historical claims loss experience.

As of December 29, 2024, our insurance reserves were $65.7 million compared to $56.8 million at December 31, 2023. Reserves are included in Accrued expenses and other current liabilities and Other long-term liabilities on the Consolidated Balance Sheets. Our insurance reserves primarily relate to auto liability and workers’ compensation claims and include the gross up of claims above our retention levels, with a corresponding receivable of $45.2 million and $34.5 million as of December 29, 2024 and December 31, 2023, respectively, recorded in Prepaid expenses and other current assets and Other assets on the Consolidated Balance Sheets. The insurance reserves represent the mid-point of the range as determined by our actuarial analysis, which considered various actuarial valuation methodologies. The determination of the recorded insurance reserves is complex due to the actuarial valuation methods utilized in determining the reserve and the assumptions related to the loss development factors and loss trends.

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Property and Equipment, Net and Impairment of Long-Lived Assets

We record property and equipment at its historical cost, which includes all costs necessarily incurred to bring the asset to the condition and location necessary for its intended use. Purchases of property and equipment were $72.5 million in 2024, $76.6 million in 2023, and $78.4 million in 2022. Property and equipment are depreciated on a straight-line basis over their useful lives, which are based on management’s estimates of the period over which the assets provide a benefit to the Company. The useful lives are estimated based on historical experience with similar assets as well as other information regarding condition and utility of the assets. Our asset useful lives are generally five to ten years for restaurant, commissary, and other equipment, twenty to forty years for buildings and improvements, and five years for technology and capitalized software. Leasehold improvements are amortized over the shorter of their estimated useful lives or the term of the respective lease, including the first renewal period (generally five to ten years). Depreciation expense was $59.6 million in 2024, $54.3 million in 2023 and $45.6 million in 2022.

We evaluate property and equipment and other long-lived assets (primarily right-of-use operating lease assets) for potential indicators of impairment at least annually, or as facts and circumstances indicate that the carrying value of the asset may not be recoverable. We perform these assessments at the operating market level for Domestic restaurants and at the restaurant level for our UK Company-owned restaurants, as this represents the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. If we determine there are indicators of impairment, we compare the net carrying value of the asset group to the projected undiscounted cash flows to be generated from the use of the asset group. If the carrying amount of the long-lived asset group exceeds the amount of estimated future undiscounted cash flows, then we estimate the fair value of the asset group and record an impairment loss if the carrying value exceeds fair value. If indicators of impairment are present, calculating projected undiscounted cash flows requires management to make assumptions and estimates for factors that include future comparable sales growth and gross margin based on internal projections as well as the historical performance of the market or individual restaurant and whether that is an indicator of future performance. These assumptions for future growth are subjective and may be negatively impacted by future changes in operating performance or economic conditions. We recorded impairment losses of $11.7 million in 2024, primarily consisting of property and equipment and lease asset impairment, related to the closure of 43 UK Company-owned restaurants and 30 UK franchised restaurants as well as five UK Company-owned restaurants where the carrying value of the asset group was not deemed to be recoverable. We also incurred impairment losses of $5.5 million during 2024 in connection with the refranchising of 15 Domestic Company-owned restaurants. During 2022, we recognized lease impairment charges of $0.9 million related to the termination of a specific and significant franchisee in the UK. We did not record any impairment losses on property and equipment during 2023.

Allowance for Credit Losses on Franchisee Notes Receivable

The Company has provided financing (recorded as notes receivable) to select Domestic and International franchisees principally for use in the construction and development of their restaurants and for the purchase of restaurants from the Company or other franchisees. Most notes receivable bear interest at fixed or floating rates and are generally secured by the assets of each restaurant and the ownership interests in the franchise.

The Company establishes an allowance for credit losses on franchisee notes receivables based on management’s estimate of the lifetime expected loss on the notes. The allowance for credit losses on notes receivable is judgmental and subjective based on management’s evaluation of historical collection experience and external market data and other factors, including those related to current market conditions and events. The Company is provided collateral rights of the franchisee’s restaurants (e.g., underlying franchise business, property and equipment) and personal guarantees from the operators to recover the carrying value of the outstanding note receivable in the event collectability concerns arise. Therefore, the Company considers the fair value of the underlying collateral rights (e.g., underlying franchisee business, property and equipment) and any guarantees when assessing the allowance for credit losses (which may require third-party valuations of fair value). Notes receivable balances are charged off against the allowance after recovery efforts have ceased.

Franchisee notes receivable was $29.0 million with an allowance for credit losses of $15.2 million as of December 29, 2024 compared to $33.6 million with an allowance for credit losses of $16.1 million as of December 31, 2023. See “Note 10. Allowance for Credit Losses” of “Notes to Consolidated Financial Statements” for further information.

Income Tax Accounts and Tax Reserves

Papa John’s is subject to income taxes in the United States and several foreign jurisdictions. Significant judgment is required in determining Papa John’s provision for income taxes and the related assets and liabilities. The provision for income taxes includes income taxes paid, currently payable or receivable and those deferred. Deferred tax assets and liabilities are determined based on differences between financial reporting and tax basis of assets and liabilities and are

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measured using enacted tax rates and laws that are expected to be in effect when the differences reverse. Deferred tax assets are also recognized for the estimated future effects of tax attribute carryforwards (e.g., net operating losses, capital losses, and foreign tax credits). The effect on deferred taxes of changes in tax rates is recognized in the period in which the new tax rate is enacted.

Valuation allowances are established when necessary on a jurisdictional basis to reduce deferred tax assets to the amounts we expect to realize and were $44.5 million and $37.6 million as of December 29, 2024 and December 31, 2023, respectively. The determination as to whether a deferred tax asset will be realized is based on the evaluation of historical profitability, future market growth, future taxable income, the expected timing of the reversals of existing temporary differences and tax planning strategies. The Company assesses deferred taxes and the adequacy or need for a valuation allowance on a quarterly basis.

Tax authorities periodically audit the Company. We record reserves and related interest and penalties for identified exposures as income tax expense. We evaluate these issues and adjust for events, such as statute of limitations expirations, court rulings or audit settlements, which may impact our ultimate payment for such exposures.

In the event the Company is unable to generate future taxable income, there is a material change in the actual effective tax rates, the time period within which the underlying temporary differences become taxable or deductible, or if the tax laws change unfavorably, then we could be required to increase the valuation allowance against deferred tax assets, resulting in an increase in income tax expense and the effective tax rate. We estimate that a one percent change in the effective income tax rate would impact the 2024 income tax expense by $1.1 million. See “Note 17. Income Taxes” of “Notes to Consolidated Financial Statements” for additional information.

Global Restaurant Sales and Unit Information

“Comparable sales” represents sales for the same base of restaurants for the same fiscal periods. “Comparable sales growth (decline)” represents the change in year-over-year comparable sales. “Global system-wide restaurant sales” represents total restaurant sales for all Company-owned and franchised restaurants open during the comparable periods, and “Global system-wide restaurant sales growth (decline)” represents the change in global system-wide restaurant sales year-over-year. Comparable sales, Comparable sales growth (decline), Global system-wide restaurant sales and Global system-wide sales growth (decline) exclude franchisees for which we suspended corporate support.

“Equivalent units” represents the number of restaurants open at the beginning of a given period, adjusted for restaurants opened, closed, acquired or sold during the period on a weighted average basis.

We believe Domestic Company-owned, North America franchised, and International comparable sales and comparable sales growth (decline) and Global system-wide restaurant sales and sales growth information is useful in analyzing our results since our franchisees pay royalties and marketing fund contributions that are based on a percentage of franchise sales. Comparable sales and Global system-wide restaurant sales results for restaurants operating outside of the United States are reported on a constant dollar basis, which excludes the impact of foreign currency translation. Franchise sales also generate commissary revenue in the United States and in certain international markets. Comparable sales growth (decline) and Global system-wide restaurant sales information is also useful for comparison to industry trends and evaluating the strength of our brand. Management believes the presentation of Global system-wide restaurant sales growth, excluding the impact of foreign currency, provides investors with useful information regarding underlying sales trends and

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the impact of new unit growth without being impacted by swings in the external factor of foreign currency. Franchise restaurant sales are not included in the Company’s revenues.

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(a)    Comparable sales growth (decline) includes a 52 week comparison for fiscal year 2024 to fiscal year 2023.

(b)    System-wide restaurant sales growth (decline) includes 53 weeks in fiscal year 2023.

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Fiscal Year

Our fiscal year ends on the last Sunday in December of each year. All fiscal years presented in the accompanying Consolidated Financial Statements consist of 52 weeks except for the 2023 fiscal year, which consisted of 53 weeks.

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Results of Operations

Financial Statement Updates

As noted above in “Presentation of Financial Results,” the Company has implemented changes to the presentation and classification of its financial statements in this Form 10-K. Please see the “Presentation of Financial Results” section for details on the changes.

Revenues

The following table sets forth the various components of Revenues from the Consolidated Statements of Operations.

The comparability of 2024 results and 2023 results is impacted by the following:

•Results for the year ended December 29, 2024 are not directly comparable with the results for the year ended December 31, 2023, as year-over-year comparisons are affected by an additional week of operations in the fourth quarter of 2023 due to the 53-week fiscal year in 2023. The estimated impact of the Company’s 53rd week on 2023 results has been highlighted in the discussion below to enhance comparability between the periods.

•The acquisition of 118 formerly franchised restaurants in the UK in the second and third quarters of 2023 (the “UK franchisee acquisitions”), and the subsequent closure of 43 and refranchising of 60 of these restaurants during the second and third quarters of 2024 impacts the comparability of revenues and expenses from the International segment for 2023 and 2024. After prior disposals of two mobile restaurants, the Company operated 13 UK Company-owned restaurants subsequent to July 1, 2024. See “Note 24. Acquisitions” and “Note 16. Restructuring” of the “Notes to Consolidated Financial Statements” for additional information on these transactions.

Total revenues decreased $76.3 million, or 3.6% to $2.06 billion for the year ended December 29, 2024, as compared to the prior year. Revenues for the 53rd week of operations in 2023 contributed approximately $41 million to prior year total revenues. Excluding the impact of the additional week in 2023, Total revenues decreased approximately $35 million, or 1.7%.

Company-owned restaurant sales, which include sales from both Domestic and International Company-owned restaurants, decreased $36.2 million, or 4.8% for the year ended December 29, 2024 compared to the prior year. The benefit of the 53rd week of operations in 2023 was approximately $15 million. Excluding the impact of the additional week in 2023, Company-owned restaurant sales would have decreased approximately $21 million. This decrease was primarily due to a decrease in comparable sales of 4.9% for our Domestic Company-owned restaurants that was partially offset by approximately $5 million of additional deferred revenue recognized during 2024 related to lowering the redemption thresholds for our Papa Rewards program, which allowed consumers to redeem rewards more quickly. Additionally, Domestic equivalent units grew 3.4% for the year ended December 29, 2024.

Franchise royalties and fees, which include revenues generated from both North American and International franchisees, decreased $8.0 million, or 4.1% for the year ended December 29, 2024 compared to the prior year. The benefit of the 53rd week of operations in 2023 was approximately $3 million. Excluding the additional week, Franchise royalties and fees would have decreased approximately $5 million. The decrease was primarily due to declines in North America franchised and International comparable sales of 3.5% and 0.8%, respectively. This was partially offset by North America equivalent unit growth of 4.6% and fewer royalty waivers in 2024 as compared to 2023.

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North America franchise restaurant sales, excluding the impact of foreign currency fluctuations, decreased 4.1% to $2.97 billion for the year ended December 29, 2024 compared to the prior year. The benefit of the 53rd week of operations in 2023 was approximately $65 million. Excluding the impact of the additional week in 2023 and foreign currency fluctuations, North America franchise restaurant sales decreased 2.0%. North America franchise restaurant sales are not included in Company revenues; however, our franchise royalties and fees are derived from these sales.

International franchise restaurant sales decreased $22.7 million to $1.16 billion for the year ended December 29, 2024 compared to $1.19 billion for the prior year. The benefit of the 53rd week of operations in 2023 was approximately $25 million. As mentioned above, the UK franchisee acquisitions in 2023 and the UK restaurant closures and refranchising transactions in the second and third quarters of 2024 impacted the comparability of International franchise sales earned in each period. Excluding the impact of the UK franchisee acquisitions, the additional week, and foreign currency fluctuations, International franchise restaurant sales increased $41.4 million or 3.6% for the year ended December 29, 2024. International franchise restaurant sales are not included in Company revenues; however, our franchise royalties and fees are derived from these sales.

Commissary revenues, which includes sales from our North American and International QC Centers, decreased $25.0 million or 2.7% for the year ended December 29, 2024 compared to the prior year. The benefit from the 53rd week of operations in 2023 was approximately $20 million. Excluding the impact of the additional week in 2023, Commissary revenues decreased approximately $5 million for the year ended December 29, 2024. The decline in Commissary revenues was primarily a result of lower volumes. This was partially offset by the previously-disclosed increase to the fixed operating margin charged by Domestic QC Centers that took effect during the first quarter of 2024.

Other revenues, which primarily includes revenues derived from our online and mobile ordering business and our previously wholly-owned print and promotions subsidiary, decreased $14.4 million, or 14.6% in 2024. The benefit of the 53rd week of operations in 2023 was approximately $1 million. Excluding the impact of the additional week in 2023, Other revenues would have decreased by approximately $13 million, as our 2023 results included $16.1 million of revenues from Preferred Marketing, our previously wholly-owned print and promotions subsidiary which was sold in the fourth quarter of 2023. See “Note 22. Divestitures” of “Notes to Consolidated Financial Statements” for additional information. This was partially offset by higher revenues generated from technology services due to an increase in the technology fee charged to franchisees during the second half of 2024.

Advertising funds revenue, which includes the operations of PJMF, local marketing funds and International marketing funds, increased $7.1 million or 4.5% in 2024. Beginning with the second quarter of 2024, PJMF increased its contribution percentage, while local marketing was made optional. The change in mix to our marketing contributions, along with more franchised locations during 2024, increased Advertising funds revenue in 2024 by approximately $10.1 million. This was partially offset by a 3.5% decline in North America franchised comparable sales.

Costs and Expenses

The following table sets forth the various components of Costs and expenses from the Consolidated Statements of Operations:

Total costs and expenses were approximately $1.90 billion, or 92.4% of total revenues in 2024, as compared to $1.99 billion, or 93.1% of total revenues for the prior year. This decrease in total costs and expenses, as a percentage of revenues, was primarily due to the following:

Cost of sales consists primarily of Company-owned store and supply chain costs incurred to generate related revenues. Components of cost of sales primarily include food and paper products, labor, freight and delivery, occupancy costs,

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advertising costs related to Company-owned restaurants, and insurance expense. Cost of sales was $1.48 billion in 2024, a decrease of $80.0 million, or 5.1%, from the prior year. The impact of the 53rd week of operations in 2023 was approximately $31 million. Excluding the impact of the additional week, Cost of sales would have decreased by approximately $49 million. The decrease in cost of sales primarily relates to lower volumes within our North America commissary segment as year-over-year comparable transactions were down approximately 3% for our franchisees. In addition, Cost of sales were lower in our Domestic Company-owned restaurants segment primarily relating to lower food and labor costs as comparable transactions were down approximately 4.5% year-over-year and advertising expense decreased as reduced local marketing reserves and lower spend in the first half of 2024 more than offset incremental marketing spend in the second half of 2024.

Cost of sales by segment for the years ended December 29, 2024 and December 31, 2023 were as follows:

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(a)    “All other” refers to all other business units that do not meet the quantitative thresholds for determining reportable segments, which primarily includes our online and mobile ordering business and our marketing funds and are not operating segments.

General and administrative expenses (“G&A expenses”) were $190.5 million, or 9.3% of total revenues for 2024 compared to $208.1 million, or 9.7% of total revenues for the prior year. G&A expenses consisted of the following (in thousands):

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(a)    Represents pre-tax gain on sale of Texas and Florida QC Center properties, net of transaction costs. See “Note 22. Divestitures”.

(b)    Represents costs associated with the International Transformation Plan. See “Note 16. Restructuring”.

(c)    Represents non-cash impairment and remeasurement charges related primarily to fixed and intangible assets from the refranchising of 15 Domestic Company-owned restaurants for the year ended December 29, 2024. Refer to “Note 22. Divestitures” for further details. For the year ended December 31, 2023, $2.0 million of severance and related costs associated with the transition of certain executives, $0.9 million one-time non-cash charge related to the reserve of certain accounts receivable related to the conflict in the Middle East, and $0.6 million accrual related to certain legal settlements are included.

(d)    Represents costs associated with repositioning the UK portfolio as well as transaction costs related to the acquisition of restaurants from franchisees.

Depreciation and amortization expense was $69.4 million, or 3.4% of revenues in 2024, as compared to $64.1 million, or 3.0% of revenues for the prior year, primarily due to higher depreciation expense related to our investments in technology platforms.

Advertising funds expense was $164.3 million, or 100.0% of advertising revenues in 2024, as compared to $158.0 million, or 100.5% of advertising revenues for the prior year. Advertising funds expense is comprised primarily of expenses incurred by PJMF, which is designed to operate at break-even as it spends all annual contributions received from the

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system. The increase was primarily due to higher advertising spend resulting from the previously discussed increase in contributions to the national marketing fund during 2024.

Operating Income by Segment

Operating income and Adjusted operating income are summarized in the following table on a reporting segment basis. Adjusted operating income is a non-GAAP measure. See “Non-GAAP Measures” for a reconciliation to the most comparable U.S. GAAP measure. We believe this non-GAAP measure is important for comparability purposes.

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(a)    See “Non-GAAP Measures” below for a detail of the adjustments in each year and for a reconciliation to the most comparable U.S. GAAP measure.

Operating income was $156.7 million for the year ended December 29, 2024 compared to $147.1 million for the prior year, an increase of $9.6 million. Adjusted operating income was $148.2 million for the year ended December 29, 2024 compared to $157.0 million for the prior year, a decrease of $8.8 million. The 53rd week contributed approximately $8 million to operating and adjusted operating income in 2023. The changes in operating income and adjusted operating income compared to the prior year were primarily due to the following:

•Domestic Company-owned restaurants operating income decreased $14.3 million for the year ended December 29, 2024. The 53rd week of operations contributed approximately $4 million to operating income in 2023. Excluding the impact of the additional week, Domestic Company-owned restaurants would have decreased approximately $11 million due to $5.5 million of non-cash impairment and remeasurement charges incurred during 2024 related primarily to fixed and intangible assets from the refranchising of 15 Domestic Company-owned restaurants and an approximate 60 basis point decrease in operating margin resulting from the lower sales in 2024, somewhat offset by lower advertising expenses due to lower spending in the first half of 2024.

•Adjusted operating income for Domestic Company-owned restaurants decreased by $8.8 million due to the factors discussed above, excluding the non-cash impairment and remeasurement charges related to the refranchising of 15 Domestic Company-owned restaurants.

•Operating income and Adjusted operating income from North America franchising decreased $25.6 million for the year ended December 29, 2024. The 53rd week of operations contributed approximately $3 million to operating income in 2023. Excluding the impact of the additional week, operating income would have decreased approximately $23 million. The primary driver was an update to our internal cost allocation methodology implemented during 2024, resulting in a reduction of $22.9 million in Operating income in the North America franchising segment during 2024, with an offsetting decrease in unallocated corporate expenses. Other drivers include a 3.5% decline in comparable sales, partially offset by higher equivalent units of 4.6% and fewer royalty waivers in 2024.

•Operating income from North America commissaries increased $46.5 million for the year ended December 29, 2024 primarily due to a $41.3 million pre-tax gain on sale, net of transaction costs, realized upon the August 2, 2024 sale of our Texas and Florida QC Center properties. The 53rd week of operations contributed approximately

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$1 million to operating income in 2023. Operating income in 2024 also benefited from the increase in the commissary fixed operating margin, which became effective in 2024, partially offset by rebates to franchisees and lower volumes.

•Adjusted operating income from North America commissaries increased by $5.2 million compared to 2023, which is due to the drivers mentioned above, excluding the gain on sale of the QC Center properties.

•Operating income from our International segment decreased by $25.3 million for the year ended December 29, 2024 primarily due to expenses of $27.3 million associated with the Company’s International Transformation Plan during 2024, while 2023 results included restructuring expenses of $2.2 million as well as $4.2 million of UK acquisition and repositioning costs. International operating income also decreased due to comparable sales declines of 0.8% and an update to our internal cost allocation methodology implemented during 2024, resulting in a reduction of $3.3 million in Operating income in the International segment during 2024, with an offsetting decrease in unallocated corporate expenses. As mentioned above, we have closed 43 of the UK Company-owned restaurants and refranchised an additional 60 restaurants under the International Transformation Plan during 2024. The 53rd week of operations also contributed approximately $1 million to operating income during 2023.

•Adjusted operating income from International decreased $5.3 million for the year ended December 29, 2024, which is due to the drivers mentioned above and excludes expenses associated with the Company’s International Transformation Plan.

•Operating income and adjusted operating income related to All Other, which is not a reportable segment and primarily includes our online and mobile ordering business and our marketing funds, decreased $6.1 million for the year ended December 29, 2024. The primary driver was an update to our internal cost allocation methodology implemented during 2024, resulting in a net reduction of $8.6 million in Operating income related to All Other during 2024, with an offsetting decrease in unallocated corporate expenses.

•Unallocated corporate expenses decreased $34.3 million for the year ended December 29, 2024 and $31.7 million on an adjusted basis. The primary driver was an update to our internal cost allocation methodology implemented during 2024, resulting in a decrease of $34.6 million in unallocated corporate expenses, with offsetting reductions in operating income primarily in the North America franchising and International segments.

Items Below Operating Income

The following table sets forth the various items below Operating income from the Consolidated Statements of Operations:

Net Interest Expense

Interest expense decreased approximately $0.9 million for the year ended December 29, 2024 compared to the prior year primarily due to lower average outstanding debt on our senior secured revolving credit facility (the “PJI Revolving Facility”), primarily offset by slightly higher rates during 2024. The 53rd week of operations in 2023 also increased prior year interest expense by approximately $0.5 million.

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Income Tax Expense

The effective income tax rate was 26.2% for 2024 and 20.1% for 2023. The higher effective rate in 2024 was primarily due to impairment charges related to the International Transformation Plan, which resulted in unrecognized tax losses and prevented the Company from generating foreign tax credits. Additionally, higher foreign withholding taxes and a tax shortfall from stock option exercises and the vesting of restricted shares in 2024 contributed to the higher rate.

See “Note 17. Income Taxes” of “Notes to Consolidated Financial Statements,” for additional information.

Net Income Attributable to Noncontrolling Interests - see “Note 9. Noncontrolling Interests” of “Notes to Consolidated Financial Statements,” for information.

Diluted Earnings Per Share

Diluted earnings per common share was $2.54 for the year ended December 29, 2024 compared to $2.48 for the year ended December 31, 2023, representing an increase of $0.06. Adjusted diluted earnings per common share, a non-GAAP measure, was $2.34 for the year ended December 29, 2024 compared to $2.71 for the year ended December 31, 2023, representing a decrease of $0.37. See “Non-GAAP Measures” for additional information. These changes were driven by the same factors impacting operating income, adjusted operating income, and income tax expense as discussed above. In addition, diluted earnings per share and adjusted diluted earnings per share reflect higher income tax expense compared with 2023 due to the factors driving a higher effective tax rate in 2024 discussed above.

Non-GAAP Measures

In addition to the results provided in accordance with U.S. GAAP, we provide certain non-GAAP measures, which present results on an adjusted basis. These are supplemental measures of performance that are not required by or presented in accordance with U.S. GAAP and include the following: adjusted operating income, adjusted net income attributable to common shareholders and adjusted diluted earnings per common share. We believe that our non-GAAP financial measures enable investors to assess the operating performance of our business relative to our performance based on U.S. GAAP results and relative to other companies. We believe that the disclosure of these non-GAAP measures is useful to investors as they reflect metrics that our management team and Board of Directors utilize to evaluate our operating performance, allocate resources and administer employee incentive plans. The most directly comparable U.S. GAAP measures to adjusted operating income, adjusted net income attributable to common shareholders and adjusted diluted earnings per common share are operating income, net income attributable to common shareholders and diluted earnings per common share, respectively. These non-GAAP measures should not be construed as a substitute for or a better indicator of the

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Company’s performance than the Company’s U.S. GAAP results. The table below reconciles our GAAP financial results to our non-GAAP financial measures.

(a)    Represents pre-tax gain on sale, net of transaction costs, realized upon the August 2, 2024 completion of the sale of our Texas and Florida QC Center properties. See “Note 22. Divestitures” for additional details.

(b)    Represents costs associated with the Company’s International Restructuring Plan. See “Note 16. Restructuring” for additional details.

(c)    Represents costs associated with repositioning the UK portfolio as well as transaction costs related to the acquisition of restaurants from franchisees.

(d)    Represents non-cash impairment and remeasurement charges related primarily to fixed and intangible assets from the refranchising of 15 Domestic Company-owned restaurants for the year ended December 29, 2024. Refer to “Note 22. Divestitures” for further details. The year ended December 31, 2023 includes $2.0 million of severance and related costs associated with the transition of certain executives, $0.9 million one-time non-cash charge related to the reserve of certain accounts receivable related to the conflict in the Middle East, and $0.6 million accrual related to certain legal settlements.

(e)    The tax effect on non-GAAP adjustments was calculated by applying the marginal tax rate of 22.7% and 22.6% for the years ended December 29, 2024 and December 31, 2023, respectively.

(f)    Amounts shown include the impact of dividends paid to participating securities.

In addition, we present free cash flow in this report, which is a non-GAAP measure. Please see “Liquidity and Capital Resources – Free Cash Flow” for a discussion of why we believe free cash flow provides useful information regarding our financial condition and results of operations, and a reconciliation of free cash flow to the most directly comparable U.S. GAAP measure.

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Liquidity and Capital Resources

Our primary sources of liquidity and capital resources are cash flows from operations and borrowings under the PJI Revolving Facility. Our principal uses of cash are operating expenses, capital expenditures, and returning value to our shareholders in the form of cash dividends and share repurchases. Our capital priorities are:

•investing for growth

•maintaining a strong balance sheet, and

•returning capital to shareholders

The Company believes that its balances of cash and cash equivalents and borrowing capacity, along with cash generated by operations and from asset sales, will be sufficient to satisfy its cash requirements, cash dividends, interest payments and share repurchases over the next twelve months and beyond.

Cash Flows

The table below summarizes our cash flows for each of the last two fiscal years (in thousands):

Operating Activities

Total cash provided by operating activities was $106.6 million for the year ended December 29, 2024 compared to $193.1 million for the prior year. The decrease of $86.4 million primarily reflects lower net income after considering the gain on sale of QC Center properties as well as unfavorable working capital changes in 2024, principally related to the following:

•Higher tax payments in 2024 due to higher income before income taxes, compared to lower prior year tax payments stemming from the application of 2022 overpayments towards 2023 tax payments;

•Higher accrual and accounts payable balances at December 31, 2023 related to the 53rd week of our 2023 fiscal year, which resulted in higher cash outflows in 2024.

Investing Activities

Total cash used in investing activities was $17.3 million in 2024 compared to $75.1 million in 2023, a decrease of $57.8 million. The decrease in cash used in investing activities was primarily due to cash proceeds of $46.7 million from the sale of two Domestic QC Centers, lower capital expenditures, and a $3.7 million increase in net repayments received on notes to franchisees. We also received a $2.3 million investment distribution related to our deferred compensation plan during the year ended December 29, 2024.

Financing Activities

Total cash used in financing activities was $91.7 million in 2024 compared to $124.1 million in 2023, a decrease of $32.4 million. In 2024, the principal financing outflows were related to dividend payments of $60.6 million, net repayments of $17.3 million to the PJI Revolving Facility, $8.5 million in payments related to finance leases, and $3.6 million in tax payments on equity compensation award issuances. In 2023, the principal financing outflows included $210.3 million in share repurchases as well as dividend payments of $58.5 million, partially offset by $159.0 million in net borrowings from the PJI Revolving Facility.

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Debt

On September 14, 2021, the Company issued $400.0 million of 3.875% senior notes (the “Notes”) which will mature on September 15, 2029. Concurrent with the issuance of the Notes, the Company entered into an amended and restated credit agreement (the “Credit Agreement”) replacing the Company’s previous credit agreement. The Credit Agreement provides for the PJI Revolving Facility, a senior secured revolving credit facility in an aggregate available principal amount of $600.0 million, of which up to $40.0 million is available as swingline loans and up to $80.0 million is available as letters of credit. The PJI Revolving Facility will mature on September 14, 2026.

Our outstanding debt as of December 29, 2024 was $746.7 million, which was comprised of $400.0 million outstanding under the Notes and $346.7 million outstanding under the PJI Revolving Facility. Remaining availability under the PJI Revolving Facility was $253.3 million as of December 29, 2024.

The Credit Agreement contains customary affirmative and negative covenants that, among other things, require customary reporting obligations, and restrict, subject to certain exceptions, the incurrence of additional indebtedness and liens, the consummation of certain mergers, consolidations, sales of assets and similar transactions, the making of investments, equity distributions and other restricted payments, and transactions with affiliates. The Company is also subject to certain financial covenants, as shown in the following table, that could restrict or impose constraints on the liquidity of our business:

Our leverage ratio is defined as outstanding debt divided by Consolidated EBITDA (as defined in the Credit Agreement), for the most recent four fiscal quarters. Our interest coverage ratio is defined as the sum of Consolidated EBITDA and consolidated rental expense for the most recent four fiscal quarters divided by the sum of consolidated interest expense and consolidated rental expense for the most recent four fiscal quarters. We were in compliance with all financial covenants as of December 29, 2024.

In addition, the Indenture governing the Notes contains customary covenants that, among other things and subject to certain exceptions, limit our ability and the ability of certain of our subsidiaries to: incur additional indebtedness and guarantee indebtedness; pay dividends or make other distributions or repurchase or redeem our capital stock; prepay, redeem or repurchase certain debt; issue certain preferred stock or similar equity securities; make loans and investments; sell assets; incur liens; enter into transactions with affiliates; enter into agreements restricting our subsidiaries’ ability to pay dividends; and consolidate, merge or sell all or substantially all of our assets.

PJMF, our national marketing fund, has a $30.0 million revolving line of credit (the “PJMF Revolving Facility”) pursuant to a Revolving Loan Agreement, dated September 30, 2015, that was most recently amended on September 30, 2024. The PJMF Revolving Facility is secured by substantially all assets of PJMF. The PJMF Revolving Facility matures on September 30, 2025, but is subject to annual renewals. The borrowings under the PJMF Revolving Facility accrue interest at a variable rate of a one month SOFR plus 1.975%. There was no debt outstanding under the PJMF Revolving Facility as of December 29, 2024 or December 31, 2023. The PJMF operating results and the related debt outstanding do not impact the financial covenants under the Credit Agreement.

See “Note 12. Debt” of “Notes to Consolidated Financial Statements” for additional information.

Share Repurchases

As part of our long-term growth and capital allocation strategy, we are committed to investing in share repurchases to provide ongoing value and enhanced returns to our shareholders. On October 28, 2021, our Board of Directors approved a share repurchase program with an indefinite duration for up to $425.0 million of the Company’s common stock.

The following table summarizes our repurchase activity for the years ended December 29, 2024 and December 31, 2023:

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We did not repurchase any shares subsequent to December 29, 2024. Approximately $90.2 million remained available under the Company’s share repurchase program as of February 21, 2025.

The Company utilizes a written trading plan under Rule 10b5-1 under the Securities Exchange Act of 1934, as amended, from time to time to facilitate the repurchase of shares of our common stock under this share repurchase program. There can be no assurance that we will repurchase shares of our common stock either through a Rule 10b5-1 trading plan or otherwise.

Dividends

The Company paid aggregate cash dividends to common stockholders of $60.6 million ($1.84 per share) and $58.5 million ($1.76 per share) for the years ended December 29, 2024 and December 31, 2023, respectively.

On January 24, 2025, our Board of Directors declared a first quarter 2025 dividend of $0.46 per common share, representing a $15.2 million aggregate dividend that was paid on February 21, 2025 to stockholders of record as of the close of business on February 10, 2025. The declaration and payment of any future dividends will be at the discretion of our Board of Directors.

Free Cash Flow

Free cash flow, a non-GAAP measure, is defined as net cash provided by operating activities (from the Consolidated Statements of Cash Flows) less the purchases of property and equipment. We view free cash flow as an important financial measure because it is one factor that management uses in determining the amount of cash available for discretionary investment. Free cash flow is not a term defined by GAAP, and as a result, our measure of free cash flow might not be comparable to similarly titled measures used by other companies. Free cash flow should not be construed as a substitute for or a better indicator of the Company’s performance than the Company’s GAAP measures.

The Company’s free cash flow for the last two years was as follows (in thousands):

Contractual Obligations

The Company’s cash requirements greater than twelve months from contractual obligations and commitments include:

•Debt Obligations and Interest Payments: Refer to “Note 12. Debt” of “Notes to Consolidated Financial Statements” for further information on our obligations and the timing of expected payments.

•Operating and Finance Leases: Refer to “Note 3 Leases” of “Notes to Consolidated Financial Statements” for further information on our obligations and the timing of expected payments.

We estimate that our capital expenditures during 2025 will be approximately $75.0 million to $85.0 million. This estimate includes development of Company-owned restaurants and technology enhancements. We intend to fund our capital expenditures with cash generated by operations and borrowings under the PJI Revolving Facility, as necessary.

We guarantee leases for certain Papa Johns North American franchisees who have purchased restaurants that were previously Company-owned. We are contingently liable on these leases. The leases have varying terms, the latest of which

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expires in 2034. As of December 29, 2024, the estimated maximum amount of undiscounted payments the Company could be required to make in the event of nonpayment by the primary lessees was approximately $10.4 million.

We have certain other commercial commitments where payment is contingent upon the occurrence of certain events. With our insurance programs, we are party to surety bonds with off-balance sheet risk for a total of $19.3 million as of December 29, 2024. The surety bond arrangements expire within one year but have automatic renewal clauses. See “Note 12. Debt” and “Note 19. Litigation, Commitments and Contingencies” of “Notes to Consolidated Financial Statements” for additional information related to contractual and other commitments.

Impact of Inflation

In recent years, we have experienced price increases in food items and other commodities, labor and benefits, and fuel and other energy costs. Inflationary pressures affect our profitability both directly, in our Company-owned restaurants and delivery mechanisms and through gross margins experienced by sales of food and supply items via our QC Centers, as well as indirectly, through higher food ingredient and paper and supply costs, rising fees from delivery aggregators driven by higher wage demands and increases in the cost of gasoline that, once reflected in upward price adjustments on their fees, can exert downward pressure on unit sales, reducing royalty fees we realize from our Domestic and International franchisees. Compensating menu price increases are subject to competitive pressure in the markets in which we operate. Expense control measures are also deployed to offset higher costs when possible. Food costs, in particular the cost of cheese, are managed to an extent by pricing agreements with suppliers and forward purchase contracts we enter into, as discussed in “Item 7A. Quantitative and Qualitative Disclosures About Market Risk.”

Forward-Looking Statements

Certain matters discussed in this Annual Report on Form 10-K and other Company communications that are not statements of historical fact constitute forward-looking statements within the meaning of the federal securities laws. Generally, the use of words such as “expect,” “intend,” “estimate,” “believe,” “anticipate,” “will,” “forecast,” “outlook”, “plan,” “project,” or similar words identify forward-looking statements that we intend to be included within the safe harbor protections provided by the federal securities laws. Such forward-looking statements include or may relate to projections or guidance concerning business performance, revenue, earnings, cash flow, earnings per share, share repurchases, depreciation and amortization, interest expenses, tax rates, system-wide sales, the current economic environment, commodity and labor costs, currency fluctuations, profit margins, supply chain operating margin, net unit growth, unit level performance, capital expenditures, restaurant and franchise development, restaurant acquisitions, restaurant closures, labor shortages, labor cost increases, changes in management, inflation, royalty relief, franchisee support and incentives, the effectiveness of our menu innovations and other business initiatives, investments in product and digital innovation, marketing efforts and investments, liquidity, compliance with debt covenants, impairments, strategic decisions and actions, changes to our national marketing fund, changes to our commissary model, dividends, effective tax rates, regulatory changes and impacts, repositioning of the UK market, International restructuring plans, including timing of completion, expected benefits and costs, International consumer demand, adoption of new accounting standards, and other financial and operational measures. Such statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions, which are difficult to predict and many of which are beyond our control. Therefore, actual outcomes and results may differ materially from those matters expressed or implied in such forward-looking statements. The risks, uncertainties and assumptions that are involved in our forward-looking statements include, but are not limited to:

•the ability of the Company to manage challenging macroeconomic conditions in the United States and internationally;

•the ability of the Company to retain key management and manage staffing and labor shortages at Company and/or franchised restaurants and our Quality Control Centers;

•increases in labor costs, food costs or sustained higher other operating costs, including as a result of supply chain disruption, inflation and related impacts, increased tariffs or other trade barriers, immigration policies, or climate change;

•the potential for delayed new restaurant openings, both domestically and internationally;

•the increased risk of phishing, ransomware and other cyber-attacks;

•risks to the global economy and our business related to geopolitical conflicts, including those in Ukraine and the Middle East;

•increased costs for branding initiatives and launching new advertising and marketing campaigns and promotions to boost consumer sentiment and sales trends, and the risk that such initiatives will not be effective;

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•risks related to a possible economic slowdown that could, among other things, reduce consumer spending or demand and result in changing consumer practices;

•risks related to social media, including publicity adversely and rapidly impacting our brand and reputation;

•aggressive changes in pricing or other marketing or promotional strategies by competitors, which may adversely affect sales and profitability; and new product and concept developments by food industry competitors;

•changes in consumer preferences or consumer buying habits, including the growing popularity of delivery aggregators, as well as changes in general economic conditions or other factors that may affect consumer confidence and discretionary spending, including higher unemployment;

•the adverse impact on the Company or our results caused by global health concerns, product recalls, food quality or safety issues, incidences of foodborne illness, food contamination and other general public health concerns about our Company-owned or franchised restaurants or others in the restaurant industry;

•the effectiveness of our technology investments and changes in unit-level operations;

•the ability of the Company and its franchisees to meet planned growth targets and operate new and existing restaurants profitably, including difficulties finding qualified franchisees, restaurant level employees or suitable sites;

•increases in insurance claims and related costs for programs funded by the Company up to certain retention limits, including medical, owned and non-owned vehicles, workers’ compensation, general liability and property;

•disruption of our supply chain or commissary operations which could be caused by our sole source of supply of mozzarella cheese, desserts, garlic cups or limited source of suppliers for other key ingredients or more generally due to weather, natural disasters including drought, disease, or geopolitical or other disruptions beyond our control;

•increased risks associated with our International operations, including economic and political conditions, instability or uncertainty in our international markets, especially emerging markets, fluctuations in currency exchange rates, difficulty in meeting planned sales targets, regulatory changes, increased tariffs and other trade barriers, and new restaurant growth;

•the impact of current or future claims and litigation and our ability to comply with current, proposed or future legislation that could impact our business;

•risks related to our indebtedness and borrowing costs, including prolonged higher interest rates, and the current state of the credit markets;

•the Company’s ability to continue to pay dividends to stockholders based upon profitability, cash flows and capital adequacy if restaurant sales and operating results decline;

•our ability to effectively operate and improve the performance of International Company-owned restaurants;

•disruption of critical business or information technology systems, or those of our suppliers, and risks associated with systems failures and data privacy and cybersecurity incidents, including theft of confidential Company, employee and customer information, including payment cards; and

•changes in Federal or state income, general and other tax laws, rules and regulations and changes in generally accepted accounting principles.

These and other risk factors are discussed in detail in “Part I. Item 1A. — Risk Factors” of this Annual Report on Form 10-K, and they may be updated from time to time in our future reports filed with the Securities and Exchange Commission. We undertake no obligation to update publicly any forward-looking statements, whether as a result of future events, new information or otherwise, except as required by law.