David Flanery - SVP, Treasurer and CFO John Schnatter - Chairman and CEO Jude Thompson - President and COO Andrew Varga - SVP and Chief Marketing Officer Tony Thompson - SVP, Papa John’s Food Service

Brad Ludington - KeyBanc Steve West - Stifel Nicolaus Mark Smith - Feltl & Company Chris O'Cull – SunTrust

Good day ladies and gentlemen and welcome to the Papa John’s First Quarter Earnings Conference call. (Operator Instructions) I would now like to turn the conference to your host Mr. David Flanery.

Thank you, Amy. Good morning. With me on the call today are our Founder, Chairman and Co-CEO John Schnatter via conference call from the road and from here in our corporate offices we have Co-CEO Jude Thompson, Chief Marketing Officer Andrew Varga, Senior Vice President PJ Food Service and Preferred Marketing Solutions Tony Thompson, Senior Vice President of North American Operations, Tim North and other members of our executive management team. After a brief financial update, John and Jude will have comments about our business and the management team will then be available for Q&A. Our discussion today will contain forward-looking statements that involve risks and uncertainties relating to future events. Actual events may differ materially from the projections discussed today. Certain factors that can cause actual results to materially differ are outlined in our earnings release and in our Forms 10-Q and 10-K. In addition certain financial measures we use on this call including earnings per share excluding BIBP are expressed on a non-GAAP basis. Our GAAP to non-GAAP results reconciliation can be found in our earnings press release available on the Investor Relations section of our website. The call is being taped and the replay will be available for a limited time on our website and in downloadable podcast format. We were extremely pleased with our financial performance in the first quarter given the unprecedented promotional environment that John and Jude will address in their remarks. We reported earnings of $0.54 per share excluding the BIBP cheese purchasing entity, a 25.6% increase over prior year Q1 earnings of $0.43 per share. Revenues increased 1.7%, as compared to the same prior year quarter with both periods reflecting the impact of new accounting guidance that no longer required us to consolidate certain franchise entities to which we had loans outstanding. The 1.7% increase was primarily due to the increase in the domestic royalty rate to 4.75% from 4.25% in Q1 of the prior year and increase in commissary revenue due to increased sales volume and an increase in international revenues due to unit growth, unit volume growth and favorable foreign currency exchange rates partially offset by 1.8% decrease in comparable sales for domestic company-owned restaurant. On a business segment basis, company-owned restaurants continued their strong financial performance as operating income increased $1 million over the same prior year quarter due to lower commodity costs, labor efficiencies and the fact that the 2009 Q1 results included a $500, 000 charge related to unit closures. Operating income for our domestic commissary business segment decreased $2.2 million as compared to Q1 of the prior year, due primarily to reduced pricing, the absorption of commodity price increases related to certain Florida vegetable products and higher fuel prices. We continued our philosophy of passing volume and other operational efficiencies through to the domestic system to help support unit economics in this tough promotional environment. As a result of favorable spot market cheese prices thus far this year, the BIBP deficit has been reduced from $20 million at 2009 yearend to $16.6 million at the end of Q1. We expect that the deficit will be reduced to approximately $11 million by the end of this year based on current futures market price projections. Domestic franchising operating income increased $2.2 million due to the previously noted increase in royalty rate partially offset by reduced unit opening fees as a result of developmental incentive programs currently in place. Operating losses for our international segment $300,000 higher than the same prior year period as expected. This operating loss increase was primarily due to cost related to the startup of the UK commissary facility opening in Q2. And increased organizational support partially offset by revenue increases from unit counts and unit volume growth. Operating income for the all others business segment increased $500,000 year-over-year due to improved results from our promotion subsidiary and e-commerce operations. Unallocated corporate expenses decreased to $2.2 million, due primarily to the plan reduction in franchisee support initiatives in the current year and higher provisions for uncollectible accounts and notes receivable in the prior year. We repurchased $5.3 million of stock in the quarter and had approximately $28.5 million of remaining repurchase authorization as of quarter end. We continue to believe returning free cash flow to shareholders via share repurchase is a good investment and helps support increase shareholder value overtime. Our free cash flow, a non-GAAP measure we define as cash flow from operation excluding BIBP, less capital expenditures was $13.4 for the first quarter and $40.4 million for the trailing four quarters representing a free cash flow yield of 5.3% based upon 27.2 million averaged diluted shares outstanding and yesterday’s $28.26 closing market price. Our net debt provision defined as positions defined as total debtless cash and cash equivalence declined by $17 million during the quarter to $56.5 million at quarter end. Our $175 million line of credit expires in early 2011 and we expect no difficulties in renewing the line prior to yearend. We are reaffirming our domestic system wide comparable sales guidance range of negative one to positive one and updating our earnings per diluted share guidance from a range of $1.70 to $1.90 excluding of the impact of BIBP to a range of $1.72 to $1.87 reflecting both our Q1 actual results and our views that the current promotional environment will continue for some period of time pressuring unit level margins. And now I’d like to turn the call over to our Founder, Chairman and Co-CEO, John Schnatter. John?

Hey, thanks David. I will start out by congratulating our franchisees and our core operators on another very solid quarter. Our stores are rocking and rolling, we have a lot of positive momentum and we’re excited. The first quarter as you know is probably the most competitive that I can remember in the 26 years, I’ve been doing this in terms of share volume of media spending and aggressive promotional pricing, that our system held out very strong and our sales are very good. And our transaction growth continues to be positive. This would be the fourth quarter in a row and we’re extremely delighted with that. The pizza category is healthy and as a whole during the first quarter was gained traffic from other QSR categories. These trends continued in to the second quarter which we’re excited about with the category remaining healthy and our system continued to gain positive traffic growth. We’ve seen this gain before, short term product and price promotions will come and go and again we’re seeing a time and time again but we’ve learned that owning the quality position and we own the quality position in the marketplace, it takes years of discipline, it takes years of focus and it takes years of effort, but as we’re paying from (inaudible). Last week as you heard we had the pleasure from our Board of Directors to promote Jude Thompson to service our co-Chief Executive Officer. I congratulate Jude on his promotion and delighted that two of us will continue our work together and we have co-CEOs. This appointment simply recognizes the partnership that Jude and I have developed while working together over the last 30 months. I’ve known Jude for 20 years and he has been on the Board for 2.5 years. It allows to the provide our CEO global responsibilities in a way that our Board of Directors build to play to our respective strengths. With that again I want to congratulate the system and I’ll turn it over to Jude Thompson for his remarks.

John, thank you. I’m also excited about the opportunity to continue to work together, along with our very talented franchise and corporate operators and management team. First let me start by commenting on our US development efforts. Our 2010 US development incentive program has been well received by the franchisees, allowing us to continue to grow domestic pipeline. Let me share a few highlights. We received – achieved four net openings during the first quarter versus four net closings at the same time in 2009. Our development pipeline has strengthened considerably over the last 12 months. Today we have agreement signed to open roughly 250 new domestic restaurants over the next four years and we are on track to achieve our stated goal of 40 to 60 net new domestic openings in the year 2010. Now to our international business. The international business also continues to show momentum and in the phase of a very tough worldwide economic conditions. A few highlights surrounding that business. During the first quarter, we had 18 net new international restaurant openings. We ended the quarter with 706 Papa John's restaurants operating internationally of which 215 were located in Korea and China and 155 were located in the United Kingdom and Ireland. Our international development pipeline at the end of the quarter included approximately 1,100 restaurants most of which are scheduled to open over the next seven years. Next I want to share a couple of changes we recently made to our operations leadership team. First Tim North, Senior Vice President North American Operations has been promoted to lead all aspects of our restaurant operations in the continental US, along with Canada, Alaska and Hawaii. Tim has been with Papa John's since 2005 and did an outstanding job as Papa John's Divisional Vice President for the North since 2005. He has hit the ground running in his new role and we look forward to his leadership. Next as announced last week after briefly leading our international divisional, President of Global Operations Bill Mitchell is leaving the Company. We thank Bill for his 10 years of service to Papa John's and wish him the very best in his future endeavors. Senior Vice President and Chief Financial Officer David Flanery, who previously led the international division from 2007 to 2009 has resumed the international leadership role on an interim basis, while we seek a permanent replacement for this position. Let me add, we have three very talented and experienced international regional vice presidents in place in miles felt Jim Thornton (inaudible), along with a strong international support structure we have enhanced over the last few years. This includes Vice Presidents in the area of international operations, support and training John (inaudible), Marketing Tim Scott, Finance and Development Joe Smith. This team remains on track to hit our international operating and development goals for 2010. Finally I want to discuss an important milestone reached by Papa John’s system this past week. Papa John’s has become the first national pizza chain to achieve to $2 billion in online sales. As most of our long term shareholders know Papa John’s was the first national chain to offer system wide online ordering when we launched papajohns.com in 2001. Since that time, we have continued to innovate and evolve our online ordering platform which today includes text, mobile web ordering and widgets. We will continue to invest in this important area as we expect one day online sales will surpass traditional telephone orders. And with that I’ll turn it back over to David for questions. David?

Thanks Jude. Amy, if you want to open the line up for questions now?

(Operator Instructions). And our first question comes from Brad Ludington of KeyBanc. Your line is open. Brad Ludington - KeyBanc: Thank you, I just wanted to ask on total, I might have missed it but you talked about the guidance for total domestic net openings of 40 to 60 which is inline but is international development still on far with previous guidance?

Yes, this is David. Yes no change with the guidance either domestically or internationally as far net unit development goes. Brad Ludington - KeyBanc: Okay, thank you and just also on the level of domestic closures, we saw this quarter was a little above our expectation. Is there something unique that happened this quarter or should we expect that to ramp up in future quarters?

We actually and this is David again and other folks may jump in, we actually had a couple of markets where we know stores are getting ready to reopen, it was more some transition between franchisees, so no I don’t at all think that you’ll see this ramp up as the year goes on. We would help it actually improve.

Yes, this is John, there is no aspect or particular attribute of the company that we’re not get on pay for, if anything we’re actually a little bit ahead on our developmental pipeline and that goes for comps, store growth, transactions etcetera. Brad Ludington - KeyBanc: Okay, thank you very much.

Thanks Brad.

Our next question comes from Steve West of Stifel Nicolaus. Your line is open. Steve West - Stifel Nicolaus: Hey guys, real quick questions on cheese cups David what do you guys looking for on cheese right now for the year? Are you still think where you were before or have you lowered your price there?

Yes, it’s only come down slightly based on the way we charge at the stores, so and we have a little detail of that in 10-Q. It maybe come down a penny or two at the store level versus what we would have through a quarter ago. The good news is though that does mean we get to eat into that BIBP deficit a little more quickly we’re probably a $1.5 or $2 million favorable in eating the deficit projections for the year versus where we would have been but its relatively flat at store level. Steve West - Stifel Nicolaus: Okay and then moving on kind of what Brad was going with the unit growth, as you look at the pipeline is getting fuller, I mean it is accelerating Jude talked about that, and I assume that’s from kind of the franchise incentives you guys have been putting in place with kind of spending some of those upfront costs. Should we expect maybe to, is this 40 to 60 is that a conservative number, could you – is there a possible that you guys would beat that number, the franchises pick up the pace here?

Hi Steve, this is Jude. First off we should hope so that we could do that but there are right now we’re on track. We are excited about the number of people that have shown interest in the Papa John’s brand. I think it’s a model that’s a winner and during this tough economic times what we try to do with our development program not only in 2010 and 2009 was to get the interest spurred back into it and those programs last year got the ball rolling and now we continue to move it on. We have to keep our finger on the pulse daily to as we watch what happens to commodities, the health of the system is great. We had very good year last year and we’d like to continue that momentum. So we feel good that we can hit that mark. We still got a lot of areas, our territories that we could – that are good opportunities for franchisees out there that are interested in being part of the Papa John’s family. Steve West - Stifel Nicolaus: Okay and then a quick follow-on to that as you look at this franchise the kind of incentives you guys have been doing, you were pulling back a little bit from last year to this year, how much long do you think you’ll be doing these incentive programs?

Well we have so much runways Steve, the actual incentive programs that they’re not that – it’s a good investment, let me say I’d like that, if you look at the model that we have with royalties paying into the national marketing fund, a little incentive to help, get people when lending maybe tough, still in certain areas of our markets. We just needed to help along the way as those dynamics change, we’ll see if we could reduce that but as it stands right now, we think spending a few dollars to have a lifelong annuity into the Papa John’s brand is a good investment. Steve West - Stifel Nicolaus: Alright, thank you Jude.

Our next question comes from Mark Smith of Feltl & Company. Your line is open. Mark Smith - Feltl & Company: Couple of quick questions for you. First, just looking at the international and just over the last little bit where we’ve seen some more turnover and Jude I know you’ve commented on this, is there anything that you can kind of point to, to maybe a slight to any fierce that there might be issues in international?

Leadership is important and we will measure twice before we are going to make sure we get the right fit to lead the international division. There is good momentum there and we have got great people that work at every day. David is a known entity. He led that area for over two years, but as you know, being a CFO, that’s a full-time job. So we are taxing him a little bit, but we are going to do find us a world-class leader for the international division and we expect big things out of that division. Mark Smith – Feltl & Company: And second, I know this is tough to comment on for competitive reasons. You talked about your outlook on price points and how sustainable kind of this $10 price point is.

Mark, I am going to turn that over to our Chief Marketing Officer, Andrew Varga. And Andrew can make some comments about that.

Sure, Mark. How are you doing? We feel very good about our ability to compete in this price environment. There is no question that the major offers that are out there about choice, simplicity and value for the consumer. And we frankly we believe that this has been great for building traffic and trial while allowing us to be able to up sell to other offers. So we feel good about the pricing environment and how we can compete in it and if that changes and the value perception changes, we will consistently evaluate our look at pricing. Mark Smith – Feltl & Company: On the last conference call, you guys have talked a little bit about the trends during Q1 and some of the transaction momentum. Can you give us an update on how the rest of the quarter turned out as far as the momentum?

David, go ahead.

I will start and others will jump in. What – as you will recall, I think what we did say last quarter, only because there was a lot of environmental things going on, we said that we were a little surprised in January, a little under our expectations in January, certainly over our expectations in February. And beyond that Mark, we probably won’t comment on a monthly basis for competitive reasons. What we have said is that the fourth consecutive quarter of positive transaction results, we have seen that trend to continue into Q2. And beyond that, we probably just won’t say a whole lot, but I will let others jump in.

Mark, I would – this is Jude again. I would frame it a little differently. When we talked last year, there was a plan. There is a master plan. There is – when we think about store development, we need growth there. We have a plan behind that. We need a healthy franchise system. We were able to during some tough economic times provide assistance. So we – it’s not only growing, although it’s making sure we don’t have store closures. So we are looking at all the magical term such as food, F&L, and the things that make sure that it is a profitable endeavor for our franchisees. And then you come in and you look at all the other aspects of our marketing, Papa’s in the house, it has traction. And so with – what we do – what we were most pleased with was we were able to turn and now we are into our fourth quarter of positive transactions and we like it. We are going to play our hand and I want to say that as – stay as humble and hungry as we possibly can. But we really like the position that we are in right now. And we are going to keep working our plan. Mark Smith – Feltl & Company: Great. Last question, kind of a two part. Just looking for any insight into the health of your franchises. First can you comment on the financing environment that your franchisees have? And then second, can you comment on – of your pipeline of domestic restaurants? How many of the new units sort of come in into the pipeline or coming from existing franchisees compared to I guess new operators?

Mark, let me start on the financing environment and then others will jump in on kind of part B of your question. It’s getting better, I think that’s the best thing we can say. The beauty of our incentive program is it gives the franchisees a smaller amount to need to finance, so the fact that banks are requiring a little more equity on the front end, our franchisees may not be in a much different position than they would have been had they had to pay full costs of a new oven and the franchisee fee, and so on. So – and that’s one of the main reasons we did that is to try to give them that opportunity to – if you go back into the financing market and get deal terms that they are comfortable with. But clearly, there are regional banks that have come to us and said, we are open for business, and we have certainly heard that GE is getting back in the business of franchise lending. We think all those are positive signs coupled with our incentive program, a franchisee should not be restricted from opening a store, because they can’t get the funding.

Mark, this is Jude. To your second part of your question about 75% of this pipeline is from our existing franchisee, so we would say a proven operator, someone known. But with that said, it’s always healthy to make sure that there is interest coming from our people that have not been a part of the Papa John’s system and so we are excited about that. And it’s a good mix, it’s a mix that we were hopeful for and it grows everybody. We watch – as I said, we have metrics all over this place. If it moves here, we measure it. And every day, I walk by that little board out there that shows what’s in that pipeline and it moves every day. We like it.

Yes, to complement – this is John. A complement there a little bit Jude, the – we have installed over 80% source in the first four months this year than we had in totality for ’09. So a lot of positive momentum in the development pipeline. As Jude said, 75% of our growth is from franchisees who are already in the system. The key to growth is helping unit economics and we work at that every day and we had probably the best year ever last year in unit economics. And the nice thing about Papa John’s, we have a lot of cash. I think, as David stated, our net debt is $55 million, our operating income for the quarter was $23 million. So we do not have a cash problem. So we – a lot of our competitors have leveraged up their business and their balance sheet is unhealthy, we don’t have that problem. If we need to develop a TOS or an interface for Internet sales or if we need to help our franchisees out, we have a lot of cash and that is a very good positions to be in. Mark Smith – Feltl & Company: Perfect, thank you.

Thanks Mark.

Our next question comes from Chris O'Cull of SunTrust. Your line is open. Chris O'Cull – SunTrust: Thanks good morning.

Hi Chris. Chris O'Cull – SunTrust: Jude, I hopped on the call a little late, so I may have missed this – missed your comments regarding the international search. Would you tell us about the search for a permanent President? Are you looking for someone with franchise international experience, retail experience? And when do you expect to complete the search?

Good questions, Chris. Hello first. Good morning. Fit, fit is so important. Papa John’s – I can say this, because I have been on the board a few years and been just celebrated my one-year anniversary as a team member. But Papa John’s is a unique culture and I know that may lost when we are talking about the numbers. But quality is a way of life. And most important, what we need someone to understand is the Papa John’s way, better ingredients, better pizza delivered everyday, you can’t scamp, you can’t link at it, you have got to live it, you have got to breathe it. And so our biggest concern and/or what I will be looking for is someone that has that in their DNA. There are people – and Chris, I said we have a team of people that miles in China and that other area, in Americas, Jim Thornton, and you have got Jack in the UK and looking at their – they know their territories. So for a leader, what I want someone as a leader is to have unbelievable love and passion for the Papa John’s way of doing things. And we have a Board meeting here in three months and I am very hopeful that I will be well along the way to start getting them involved. And so three to six months, we hope to have that there. And probably if you ask David, who I have just given him another job would say he would like it in three to four weeks. But we are going to be very selective and make sure we do the right thing. Chris O'Cull – SunTrust: Okay, that’s fair, it’s good. And then, John my next question relates just to promotions. It seems like during the quarter, the company tried to push some higher check promotions like the extra-large four top, which I actually thought was a better value than the $10 pie. But you seem to quickly go back to the $10 pie promotion. I guess my question is do you think Papa John’s promotions are really being dictated by what the larger players are doing right now? And if so, how do you change that?

And Chris, this is Jude. That wasn’t a first quarter promotion. That was a period four promotion.

Yes, Chris, this is John. I will comment and let Andrew jump in. The – you hit it on the – hit it dead center when you said – the category moves extremely quick, quicker than I can ever remember moving. We are always going to test the price elasticity, because if we can sell a $11 pizza versus the $10, we will. And sometimes you push that envelope and you got to go back and drill back until you drive that traffic account. But when the largest players is doing a $10 pizza, you can’t ignore that. And Andrew why don’t you – why don’t you jump in here?

Yes, I mean I think the – to comment on what we are trying to do is recognize the environment that we are in. There are some simple easy to understand, price points that are out there right now. What we have been successful in doing and the Super Bowl was a good example is having that extra four top co-exist with the $10 offer and makes very well alongside the $10 offer. So we feel confident that we can take the $10 price point and up sell where necessary, but we have got to be mindful of the environment we are in, I mean that’s the critical piece of this. And the value proposition based on regional preferences or economic differences are going to change over time and we are going to be the ones to really stay on top of that and evaluate where we go. Chris O'Cull – SunTrust: Andrew was – so was that – so the promotion, you ran both of those promotions off during the first quarter?

We did – we actually did during the Super Bowl and NFL promotion which we had for three weeks. And it was very successful, they co-existed together. Chris O'Cull – SunTrust: In the primary promotion today, in the first – or in the second quarter has been the $10 promotion.

It’s actually been that same promotion. Chris O'Cull – SunTrust: Okay. And then when you think about product pipeline, how does – I mean, is there a – can you talk a little bit about the product pipeline and maybe what some of the ideas area that – I mean, is the focus on – continued to be on pizza, are you guys looking at other opportunities like calzones or –?

This is Jude. For competitive reasons, we try to keep that as close to the vest as possible. I think we have mentioned over the years we have a very robust R&D division and we look at things that make it work, you have to not increase complexity at the store level because that's where we get quality and that where the – if it becomes too hard. So we continue to look at things. LTOs, limited time offers, those are always options for us and – but we really wouldn’t want to comment on any tip our hand any further out on where we are right now.

Our next question comes from Brad Ludington of KeyBanc. Brad Ludington – KeyBanc: Just had a few follow-ups. In starting off kind of following on Chris’ line, when you look at the deal, the $10 pizza right now, you have the upsell to $2 more for an XL. Can you share what the hit rate has been on that or whether you feel like it at least been successful?

We like it, but I would not want to give those numbers away. Again, we are – our competitors have their plan, we have our game plan and we would like to make sure we keep that a part of our inside knowledge. Brad Ludington – KeyBanc: And then on the website, do you have a target date for when the next version of the website rolls out?

This is Jude. We do. When it’s effective, it works, it’s right, and it’s not disruptive. It will happen this year. But we – it’s got to have the same quality components and we are – I see it how it’s being built today, the online system, it just keeps us in the game as the leader and we like it – you could expect something, third quarterish we think. But remember this, as technology – it moves so quickly, there will be continued updates, improvements, modules, however you want to view that that we have to continue to improve daily because you just can't put this on the shelf and say I am done for the next five years. We will continue to make sure we keep pace with what our customer base wants from any online ordering company. Brad Ludington – KeyBanc: Okay. And talking about the additional marketing support, just primarily in the back half of the year, and in 2000 -- you talked how besides the increased contributions from franchisee or from the system, I think there is going to incremental company support as well. Last year I think you stated it was $9.5 million in company incremental support and we were expecting around $4 million from the 25 basis point royalty increase. Can you quantify where that should go at this point?

I will jump in here. It’s more an enticement just kind of saying that we are part of the solution here too going back to our system, it’s nowhere near those kind of numbers. We probably won't give you the exact dollar amount, but it’s nothing near those sides of numbers. It’s more just kind of a little sweetener to the overall system stepping up and increasing the contribution rate. Brad Ludington – KeyBanc: And then just a couple of others. The commissary operating margin kind of beat our projections this quarter at 9%. Should we consider somewhere in the 9s to be a reasonable assumption for the rest of this year?

I think from a consistency standpoints of, this is Tony Thompson, my response to that will be we are going to continue to leverage our commissary system for benefit of economics with our restaurants consistent to what we have done in the past. We have got a lot of good momentum. As you said on transaction, which ends up by helping the efficiency of our system, so I wouldn’t want to get too far ahead of saying exactly where we will land.

And the only other thing I will add to that Brad is that their business very much follows the seasonality of our restaurant business. So their Q3 piece count and activity is going to drop just like our restaurants do. So I don’t think you could take a Q1 and project it across the full year. There will be a little seasonality to that. On the other hand, positive transactions are a good thing for everybody and they get to take advantage of that.

This is John. We are definitely on a mission to drive the stock price. And to get the $50 of share, you got to be get to $40, and you get there in two ways. You buy that stock back and you drive that operating income and we are doing both. And we are a mission to do both. Brad Ludington – KeyBanc: Okay, good. And then final question. Looking at the domestic royalty rate, it came in about 30 basis points on an effective basis, about basis points below the stated rate this quarter. Last year it kind of ranged 40 to 50 basis points. Should we expect that you say somewhere more in the 30s range this year and take that as a sign that some of these concessions are rolling off at this point.

I think that's a fair assessment. It speaks to the health of the system and the levels we’ve talked about, reducing overall levels of support. I think that's a fair assessment of the situation, Brad.

I am not showing any additional questions sir.

Thank you very much, thanks everyone.

Ladies and gentlemen, this does conclude today’s conference. Thank you for your participation and have a wonderful day. You may all disconnect.