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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549





Form 10-Q





(Mark one)

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

For the quarterly period ended June 29, 2010

or



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

For the transition period from              to

Commission file number 333-138338





NPC
INTERNATIONAL, INC.

(Exact name of registrant as specified in its charter)







| |  |                                          |  |                                                                |  |            |  |                                         |  | 
| |  | ---------------------------------------- |  | -------------------------------------------------------------- |  | ---------- |  | --------------------------------------- |  | 
| |  |                                          |  | KANSAS                                                         |  |            |  | 48-0817298                              |  | 
| |  |                                          |  | (State or other jurisdiction of
incorporation or organization) |  |            |  | (I.R.S. employer
identification number) |  | 
| |  |                                          |  |                                                               
| |  | 7300 W.
129thStreet
Overland Park, KS    |  |                                                                |  | 66213      |  |                                        
| |  | (Address of principal executive offices) |  |                                                                |  | (Zip Code) |  |                                        

Telephone: (913) 327-5555

(Registrants telephone number, including area code)





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

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

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

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

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

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

There is no market for the Registrants equity. As of August 6, 2010, there were 1,000 shares of common stock outstanding.







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INDEX



|              |  |                                                                                       |  |     
|------------- |  | ------------------------------------------------------------------------------------- |  | ----
|              |  |                                                                                       |  | Page
|Part I        |  | FINANCIAL INFORMATION                                                                 |  |     
|              |  |                                                                                      
|Item 1.       |  | Condensed Consolidated Financial Statements (unaudited)                               |  | 3   
|Item 2.       |  | Managements Discussion and Analysis of Financial Condition and Results of
Operations |  | 13  
|Item 3.       |  | Quantitative and Qualitative Disclosures About Market Risk                            |  | 25  
|Item 4.       |  | Controls and Procedures                                                               |  | 26  
|              |  |                                                                                      
|Part II       |  | OTHER INFORMATION                                                                     |  |     
|Item 1.       |  | Legal Proceedings                                                                     |  | 27  
|Item 1A.      |  | Risk Factors                                                                          |  | 27  
|Item 2.       |  | Unregistered Sales of Equity Securities and Use of Proceeds                           |  | 27  
|Item 3.       |  | Defaults Upon Senior Securities                                                       |  | 27  
|Item 4.       |  | Reserved                                                                              |  | 27  
|Item 5.       |  | Other Information                                                                     |  | 27  
|Item 6.       |  | Exhibits                                                                              |  | 29  
|Exhibit Index |  |                                                                                       |  | 29  
|Signatures    |  |                                                                                       |  |     



2







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PART I

|PART 1. | FINANCIAL INFORMATION
|------- | ---------------------



|Item 1. | Condensed Consolidated Financial Statements
|------- | -------------------------------------------

NPC INTERNATIONAL, INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited)

(in thousands, except share and per share data)



|                                                                                                                                          |  |              |           |                  |   |          
|----------------------------------------------------------------------------------------------------------------------------------------- |  | ------------ | --------- | ---------------- | - | ---------
|                                                                                                                                          |  | June 29,2010 |           | December 29,2009
|Assets                                                                                                                                    |  |              |           |                  |   |          
|Current assets:                                                                                                                           |  |              |           |                  |   |          
|Cash and cash equivalents                                                                                                                 |  | $            | 26,814    |                  | $ | 14,669   
|Accounts receivable                                                                                                                       |  |              | 3,827     |                  |   | 4,897    
|Inventories                                                                                                                               |  |              | 6,521     |                  |   | 7,019    
|Prepaid expenses and other current assets                                                                                                 |  |              | 5,527     |                  |   | 4,415    
|Assets held for sale                                                                                                                      |  |              | 960       |                  |   | 1,010    
|Deferred income taxes                                                                                                                     |  |              | 3,810     |                  |   | 2,801    
|Income taxes receivable                                                                                                                   |  |              |          |                  |   | 2,703    
|                                                                                                                                          |  |              |           |                  |   |          
|Total current assets                                                                                                                      |  |              | 47,459    |                  |   | 37,514   
|Facilities and equipment                                                                                                                  |  |              | 274,088   |                  |   | 270,304  
|Less accumulated depreciation                                                                                                             |  |              | (121,229) |                  |   | (105,891)
|                                                                                                                                          |  |              |           |                  |   |          
|Net facilities and equipment                                                                                                              |  |              | 152,859   |                  |   | 164,413  
|Franchise rights, less accumulated amortization of $36,261 and $31,509, respectively                                                      |  |              | 404,001   |                  |   | 408,714  
|Goodwill                                                                                                                                  |  |              | 191,701   |                  |   | 191,701  
|Other assets, net                                                                                                                         |  |              | 25,529    |                  |   | 26,982   
|                                                                                                                                          |  |              |           |                  |   |          
|Total assets                                                                                                                              |  | $            | 821,549   |                  | $ | 829,324  
|                                                                                                                                          |  |              |           |                  |   |          
|                                                                                                                                          |  |             
|Liabilities and stockholders equity                                                                                                      |  |              |           |                  |   |          
|Current liabilities:                                                                                                                      |  |              |           |                  |   |          
|Accounts payable                                                                                                                          |  | $            | 25,870    |                  | $ | 25,936   
|Accrued liabilities                                                                                                                       |  |              | 41,608    |                  |   | 34,484   
|Accrued interest                                                                                                                          |  |              | 4,479     |                  |   | 4,936    
|Income taxes payable                                                                                                                      |  |              | 3,093     |                  |   |         
|Current portion of insurance reserves                                                                                                     |  |              | 10,025    |                  |   | 9,056    
|Current portion of debt                                                                                                                   |  |              | 1,190     |                  |   | 31,340   
|                                                                                                                                          |  |              |           |                  |   |          
|Total current liabilities                                                                                                                 |  |              | 86,265    |                  |   | 105,752  
|                                                                                                                                          |  |              |           |                  |   |          
|Long-term debt                                                                                                                            |  |              | 401,180   |                  |   | 402,370  
|Other deferred items                                                                                                                      |  |              | 31,778    |                  |   | 36,841   
|Insurance reserves                                                                                                                        |  |              | 13,025    |                  |   | 12,313   
|Deferred income taxes                                                                                                                     |  |              | 114,953   |                  |   | 113,473  
|                                                                                                                                          |  |              |           |                  |   |          
|Total long-term liabilities                                                                                                               |  |              | 560,936   |                  |   | 564,997  
|                                                                                                                                          |  |              |           |                  |   |          
|Commitments and contingencies                                                                                                             |  |              |           |                  |   |          
|Stockholders equity:                                                                                                                     |  |              |           |                  |   |          
|Common stock ($0.01 par value, 2,000 shares authorized and 1,000 shares issued and outstanding as of June 29, 2010 and
December 29, 2009) |  |              |          |                  |   |         
|Paid-in-capital                                                                                                                           |  |              | 163,344   |                  |   | 163,325  
|Accumulated other comprehensive loss                                                                                                      |  |              | (2,198)   |                  |   | (3,372)  
|Retained earnings (deficit)                                                                                                               |  |              | 13,202    |                  |   | (1,378)  
|                                                                                                                                          |  |              |           |                  |   |          
|Total stockholders equity                                                                                                                |  |              | 174,348   |                  |   | 158,575  
|                                                                                                                                          |  |              |           |                  |   |          
|Total liabilities and stockholders equity                                                                                                |  | $            | 821,549   |                  | $ | 829,324  
|                                                                                                                                          |  |              |           |                  |   |          

See accompanying notes to the condensed consolidated
financial statements.



3







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NPC INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(in thousands)



|                                                       |  |                                   |         |                           |   |        
|------------------------------------------------------ |  | --------------------------------- | ------- | ------------------------- | - | -------
|                                                       |  | 13
WeeksEnded        June 29,2010 |         | 13
WeeksEndedJune 30,2009
|Sales:                                                 |  |                                   |         |                           |   |        
|Net product sales                                      |  | $                                 | 235,955 |                           | $ | 214,336
|Fees and other income                                  |  |                                   | 10,841  |                           |   | 9,477  
|                                                       |  |                                   |         |                           |   |        
|Total sales                                            |  |                                   | 246,796 |                           |   | 223,813
|Costs and expenses:                                    |  |                                   |         |                           |   |        
|Cost of sales                                          |  |                                   | 71,919  |                           |   | 57,421 
|Direct labor                                           |  |                                   | 70,787  |                           |   | 65,304 
|Other restaurant operating expenses                    |  |                                   | 74,578  |                           |   | 73,807 
|General and administrative expenses                    |  |                                   | 12,298  |                           |   | 12,092 
|Corporate depreciation and amortization of intangibles |  |                                   | 2,837   |                           |   | 2,933  
|Other                                                  |  |                                   | 426     |                           |   | 123    
|                                                       |  |                                   |         |                           |   |        
|Total costs and expenses                               |  |                                   | 232,845 |                           |   | 211,680
|                                                       |  |                                   |         |                           |   |        
|Operating income                                       |  |                                   | 13,951  |                           |   | 12,133 
|Interest expense                                       |  |                                   | (7,349) |                           |   | (7,819)
|                                                       |  |                                   |         |                           |   |        
|Income before income taxes                             |  |                                   | 6,602   |                           |   | 4,314  
|Income tax expense                                     |  |                                   | 1,482   |                           |   | 957    
|                                                       |  |                                   |         |                           |   |        
|Net income                                             |  | $                                 | 5,120   |                           | $ | 3,357  
|                                                       |  |                                   |         |                           |   |        

See accompanying notes to the condensed consolidated
financial statements.



4







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NPC INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(in thousands)



|                                                       |  |                                   |          |                                   |   |         
|------------------------------------------------------ |  | --------------------------------- | -------- | --------------------------------- | - | --------
|                                                       |  | 26
WeeksEnded        June 29,2010 |          | 26
WeeksEnded        June 30,2009
|Sales:                                                 |  |                                   |          |                                   |   |         
|Net product sales                                      |  | $                                 | 488,584  |                                   | $ | 436,696 
|Fees and other income                                  |  |                                   | 22,668   |                                   |   | 19,458  
|                                                       |  |                                   |          |                                   |   |         
|Total sales                                            |  |                                   | 511,252  |                                   |   | 456,154 
|Costs and expenses:                                    |  |                                   |          |                                   |   |         
|Cost of sales                                          |  |                                   | 147,890  |                                   |   | 116,951 
|Direct labor                                           |  |                                   | 145,674  |                                   |   | 131,729 
|Other restaurant operating expenses                    |  |                                   | 152,569  |                                   |   | 147,963 
|General and administrative expenses                    |  |                                   | 24,444   |                                   |   | 24,770  
|Corporate depreciation and amortization of intangibles |  |                                   | 5,676    |                                   |   | 5,855   
|Other                                                  |  |                                   | 786      |                                   |   | 765     
|                                                       |  |                                   |          |                                   |   |         
|Total costs and expenses                               |  |                                   | 477,039  |                                   |   | 428,033 
|                                                       |  |                                   |          |                                   |   |         
|Operating income                                       |  |                                   | 34,213   |                                   |   | 28,121  
|Interest expense                                       |  |                                   | (14,874) |                                   |   | (15,743)
|                                                       |  |                                   |          |                                   |   |         
|Income before income taxes                             |  |                                   | 19,339   |                                   |   | 12,378  
|Income tax expense                                     |  |                                   | 4,759    |                                   |   | 2,999   
|                                                       |  |                                   |          |                                   |   |         
|Income from continuing operations                      |  |                                   | 14,580   |                                   |   | 9,379   
|Loss from discontinued operations, net of taxes        |  |                                   |         |                                   |   | (59)    
|                                                       |  |                                   |          |                                   |   |         
|Net income                                             |  | $                                 | 14,580   |                                   | $ | 9,320   
|                                                       |  |                                   |          |                                   |   |         

See accompanying notes to the condensed consolidated
financial statements.



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NPC INTERNATIONAL, INC.

CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY

(Unaudited)

(in thousands, except share data)



|                                                                                 |  |                        |  |              |   |                 |   |                            |  |   |                                      |   |                            |   |         |  |   |        
|-------------------------------------------------------------------------------- |  | ---------------------- |  | ------------ | - | --------------- | - | -------------------------- |  | - | ------------------------------------ | - | -------------------------- | - | ------- |  | - | -------
|                                                                                 |  | Shares
of common
stock |  | Common
stock |   | Paid-in
capital |   | Retained
(deficit)earnings |  |   | Accumulated
other
comprehensive
loss |   | Total
stockholders
equity
|                                                                                 |  |                       
|                                                                                 |  |                        |  |              |   |                
|Balance at December 29, 2009                                                     |  | 1,000                  |  | $            |  |                 | $ | 163,325                    |  | $ | (1,378                               | ) |                            | $ | (3,372) |  | $ | 158,575
|Restricted common units
Comprehensive income:                                    |  |                        |  |              |   |                 |   | 19                         |  |   |                                      |   |                            |   |         |  |   | 19     
|Net income                                                                       |  |                       |  |              |  |                 |   |                           |  |   | 14,580                               |   |                            |   |        |  |   | 14,580 
|Net unrealized change in cash flow hedging derivatives                           |  |                       |  |              |  |                 |   |                           |  |   |                                     |   |                            |   | (1,091) |  |   | (1,091)
|Reclassification adjustment into income for derivatives used in cash flow hedges |  |                       |  |              |  |                 |   |                           |  |   |                                     |   |                            |   | 2,265   |  |   | 2,265  
|                                                                                 |  |                        |  |              |   |                 |   |                            |  |   |                                      |   |                            |   |         |  |   |        
|Total comprehensive income                                                       |  |                        |  |              |   |                 |   |                            |  |   |                                      |   |                            |   |         |  |   | 15,754 
|                                                                                 |  |                       
|Balance at June 29, 2010                                                         |  | 1,000                  |  | $            |  |                 | $ | 163,344                    |  | $ | 13,202                               |   |                            | $ | (2,198) |  | $ | 174,348
|                                                                                 |  |                       

See accompanying notes to the condensed
consolidated financial statements.



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NPC INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(in thousands)



|                                                                              |  |               |          |               |   |          
|----------------------------------------------------------------------------- |  | ------------- | -------- | ------------- | - | ---------
|                                                                              |  | 26 WeeksEnded |          | 26 WeeksEnded
|                                                                              |  | June 29, 2010 |          | June 30, 2009
|Operating activities                                                          |  |               |          |               |   |          
|Net income                                                                    |  | $             | 14,580   |               | $ | 9,320    
|Adjustments to reconcile net income to cash provided by operating activities: |  |               |          |               |   |          
|Depreciation and amortization                                                 |  |               | 22,523   |               |   | 25,995   
|Amortization of debt issuance costs                                           |  |               | 1,285    |               |   | 997      
|Net facility impairment charges                                               |  |               | 844      |               |   | 251      
|Deferred income taxes                                                         |  |               | (282)    |               |   | 480      
|Net (gain) loss on disposition of assets                                      |  |               | (90)     |               |   | 102      
|Restricted unit compensation                                                  |  |               | 19       |               |   |         
|Changes in assets and liabilities, excluding acquisitions:                    |  |               |          |               |   |          
|Accounts receivable                                                           |  |               | 953      |               |   | 364      
|Inventories                                                                   |  |               | 498      |               |   | 1,304    
|Prepaid expenses and other current assets                                     |  |               | (1,167)  |               |   | (894)    
|Accounts payable                                                              |  |               | (66)     |               |   | 2,894    
|Income taxes                                                                  |  |               | 5,796    |               |   | (305)    
|Accrued interest                                                              |  |               | (457)    |               |   | (1,939)  
|Accrued liabilities                                                           |  |               | 4,475    |               |   | 550      
|Insurance reserves                                                            |  |               | 1,681    |               |   | 449      
|Other deferred items                                                          |  |               | 67       |               |   | 353      
|Other assets                                                                  |  |               | (586)    |               |   | (190)    
|                                                                              |  |               |          |               |   |          
|Net cash provided by operating activities                                     |  |               | 50,073   |               |   | 39,731   
|                                                                              |  |               |          |               |   |          
|Investing activities                                                          |  |               |          |               |   |          
|Capital expenditures                                                          |  |               | (8,643)  |               |   | (14,755) 
|Net proceeds from sale of units                                               |  |               |         |               |   | 19,463   
|Purchase of business assets, net of cash acquired                             |  |               |         |               |   | (32,968) 
|Proceeds from sale or disposition of assets                                   |  |               | 2,081    |               |   | 640      
|                                                                              |  |               |          |               |   |          
|Net cash used in investing activities                                         |  |               | (6,562)  |               |   | (27,620) 
|                                                                              |  |               |          |               |   |          
|Financing activities                                                          |  |               |          |               |   |          
|Borrowings under revolving credit facility                                    |  |               | 13,105   |               |   | 170,283  
|Payments under revolving credit facility                                      |  |               | (13,105) |               |   | (168,283)
|Payments on term bank facilities                                              |  |               | (31,340) |               |   | (17,094) 
|Debt issue costs                                                              |  |               | (26)     |               |   | (21)     
|Proceeds from sale-leaseback transactions                                     |  |               |         |               |   | 2,891    
|Proceeds from sale-leaseback transactions on formerly leased properties       |  |               |         |               |   | 902      
|                                                                              |  |               |          |               |   |          
|Net cash used in financing activities                                         |  |               | (31,366) |               |   | (11,322) 
|                                                                              |  |               |          |               |   |          
|Net change in cash and cash equivalents                                       |  |               | 12,145   |               |   | 789      
|Beginning cash and cash equivalents                                           |  |               | 14,669   |               |   | 5,327    
|                                                                              |  |               |          |               |   |          
|Ending cash and cash equivalents                                              |  | $             | 26,814   |               | $ | 6,116    
|                                                                              |  |               |          |               |   |          
|                                                                              |  |              
|Supplemental disclosures of cash flow information:                            |  |               |          |               |   |          
|Net cash paid for interest                                                    |  | $             | 14,046   |               | $ | 16,685   
|Net cash (received) paid for income taxes                                     |  | $             | (1,087)  |               | $ | 2,667    

See accompanying notes to the condensed consolidated financial statements.



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NPC INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1 
Basis of Presentation

NPC International, Inc., together with its subsidiaries, is referred to herein as NPC
and the Company. NPC Acquisition Holdings, LLC, its parent company, is referred to herein as Holdings.

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

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

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

Reclassifications. Reclassifications have been made to the prior years operating activities section of the Consolidated
Statement of Cash Flows to conform to current year reporting.

Note 2  Goodwill and Other Intangible Assets

There were no changes in goodwill during the 26 weeks ended June 29, 2010.

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



|                                |  |                      |         |                         |   |               |  |   |        
|------------------------------- |  | -------------------- | ------- | ----------------------- | - | ------------- |  | - | -------
|                                |  | June 29, 2010       
|                                |  | Gross CarryingAmount |         | AccumulatedAmortization |   | Net BookValue
|Amortizable intangible assets:  |  |                      |         |                         |   |               |  |   |        
|Franchise rights                |  | $                    | 440,262 |                         | $ | (36,261)      |  | $ | 404,001
|Favorable leasehold interests   |  |                      | 10,071  |                         |   | (2,611)       |  |   | 7,460  
|Unfavorable leasehold interests |  |                      | (4,327) |                         |   | 1,490         |  |   | (2,837)
|Internally developed software   |  |                      | 1,069   |                         |   | (891)         |  |   | 178    
|Non-compete                     |  |                      | 1,925   |                         |   | (1,604)       |  |   | 321    
|                                |  |                      |         |                         |   |               |  |   |        
|Total                           |  | $                    | 449,000 |                         | $ | (39,877)      |  | $ | 409,123
|                                |  |                      |         |                         |   |               |  |   |        
|                                | 
|                                |  | December 29, 2009   
|                                |  | Gross CarryingAmount |         | AccumulatedAmortization |   | Net BookValue
|Amortizable intangible assets:  |  |                      |         |                         |   |               |  |   |        
|Franchise rights                |  | $                    | 440,223 |                         | $ | (31,509)      |  | $ | 408,714
|Favorable leasehold interests   |  |                      | 10,114  |                         |   | (2,241)       |  |   | 7,873  
|Unfavorable leasehold interests |  |                      | (4,425) |                         |   | 1,248         |  |   | (3,177)
|Internally developed software   |  |                      | 1,069   |                         |   | (784)         |  |   | 285    
|Non-compete                     |  |                      | 1,925   |                         |   | (1,412)       |  |   | 513    
|                                |  |                      |         |                         |   |               |  |   |        
|Total                           |  | $                    | 448,906 |                         | $ | (34,698)      |  | $ | 414,208
|                                |  |                      |         |                         |   |               |  |   |        

Amortization expense on intangible assets was
$2.6 million and $2.7 million for the 13 weeks ended June 29, 2010 and June 30, 2009, respectively, and $5.1 million and $5.4 million for the 26 weeks ended June 29, 2010 and June 30, 2009, respectively.



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Note 3  Debt

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



|                                         |  |              |         |                      |   |         |  | 
|---------------------------------------- |  | ------------ | ------- | -------------------- | - | ------- |  | 
|                                         |  | June 29,2010 |         | December 29,    2009 |   |        
|Senior Secured Term Loan Note            |  | $            | 227,370 |                      | $ | 258,710 | 
|Senior Subordinated Notes                |  |              | 175,000 |                      |   | 175,000 | 
|Senior Secured Revolving Credit Facility |  |              |        |                      |   |        | 
|                                         |  |              |         |                      |   |         | 
|                                         |  |              | 402,370 |                      |   | 433,710 | 
|Less current portion                     |  |              | 1,190   |                      |   | 31,340  | 
|                                         |  |              |         |                      |   |         | 
|                                         |  | $            | 401,180 |                      | $ | 402,370 | 
|                                         |  |              |         |                      |   |         | 

The Companys debt facilities contain restrictions on additional borrowing,
certain asset sales, capital expenditures, dividend payments, certain investments and related-party transactions, as well as requirements to maintain various financial ratios. At June 29, 2010, the Company was in compliance with all of its debt
covenants.

Under the provisions of the credit agreement for the Senior Secured Credit Facility, the Company is required under
certain circumstances to make an excess cash flow mandatory prepayment on the term loan notes not later than 120 days after each fiscal year end. Based upon the amount of excess cash flow generated during fiscal 2009 and the Companys leverage
at fiscal 2009 year end, each of which is defined in the credit agreement, the Company was required to make an excess cash flow mandatory prepayment of $31.3 million. This amount was included in the current portion of long-term debt at
December 29, 2009 and was paid utilizing cash reserves on March 30, 2010. Based on currently expected 2010 results, the Company anticipates that it will be required to make a mandatory prepayment of between $23 million and $28 million in
April 2011 depending upon the amount of excess cash flow generated during its fiscal year and its leverage at fiscal year-end. As this is a preliminary estimate, the final excess cash flow mandatory prepayment could ultimately differ
materially from the amounts reflected above and as such the Company has not reflected any of this estimate as a current liability.

Based upon independent trading data the estimated fair value of the Companys debt facilities was as follows (in thousands):



|                                         |  |              |         |                  |   |         |  | 
|---------------------------------------- |  | ------------ | ------- | ---------------- | - | ------- |  | 
|                                         |  | June 29,2010 |         | December 29,2009 |   |        
|Senior Secured Term Loan Note            |  | $            | 216,570 |                  | $ | 242,541 | 
|Senior Subordinated Notes                |  |              | 174,353 |                  |   | 172,375 | 
|Senior Secured Revolving Credit Facility |  |              |        |                  |   |        | 
|                                         |  |              |         |                  |   |         | 
|                                         |  | $            | 390,923 |                  | $ | 414,916 | 
|                                         |  |              |         |                  |   |         | 
|Carrying value                           |  | $            | 402,370 |                  | $ | 433,710 | 

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

Note 4  Income Taxes

For the 26 weeks ended June 29, 2010, the Company recorded income tax expense of $4.8 million which resulted in an effective income
tax rate of 24.6% compared to income tax expense of $3.0 million or an effective tax rate of 24.2% during the 26 weeks ended June 30, 2009. For the 26 weeks ended June 29, 2010, the lower than statutory rate was primarily attributable to
tax credits. The Companys effective tax rate of 24.2% for the 26 weeks ended June 30, 2009 was also impacted by tax credits and $1.0 million of favorable discrete adjustments related to state tax rate adjustments and federal tax credit
carry back adjustments.

Note 5  Commitments and Contingencies

On May 12, 2009, a lawsuit against the Company, entitled Jeffrey Wass, et al. v. NPC International, Inc., Case
No. 2:09-CV-2254-JWL-KGS, was filed in the United States District Court for the District of Kansas. A First Amended Complaint, entitled Jeffrey Wass and Mark Smith, et al. v. NPC International, Inc., was filed on July 2, 2009. The
Complaint was brought by Plaintiffs Wass and Smith individually and on behalf of similarly situated employees who work or previously



9







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worked as delivery drivers for NPC. The First Amended Complaint alleged a collective action under the Fair Labor Standards Act (FLSA) to recover unpaid wages and excessive deductions
owed to plaintiffs and similarly situated workers employed by NPC in 28 states, and as a class action under Colorado law on behalf of Plaintiff Smith and all other similarly situated workers employed by NPC in Colorado to recover unpaid minimum
wages and excess payroll deductions and certain costs relating to uniforms and special apparel. The First Amended Complaint alleged among other things that NPC deprived plaintiffs and other NPC delivery drivers of minimum wages by providing
insufficient reimbursements for automobile and other job-related expenses incurred for the purposes of delivering NPCs pizza and other food items.

On March 2, 2010, the Court entered an Order granting NPCs motions for judgment on the pleadings as to all claims brought by
plaintiffs in the First Amended Complaint, with the exception of a claim for the reimbursement of uniform costs under Colorado law. The Order provided that the claims failed to state a claim under the FLSA and Colorado law and, therefore, would be
dismissed with prejudice unless plaintiffs filed a Second Amended Complaint that cured the deficiencies in the First Amended Complaint. The Order also operated to moot plaintiffs then-pending motion for conditional collective action
certification.

Plaintiffs filed a Second Amended Complaint on March 22, 2010, which alleged a collective action under
the FLSA on behalf of plaintiffs and similarly situated workers employed by NPC in 28 states, and a class action under Rule 23 of the Federal Rules of Civil Procedure on behalf of Plaintiff Smith and similarly situated workers employed in states in
which the state minimum wage is higher than the federal minimum wage. The Second Amended Complaint contended that NPC deprived delivery drivers of minimum wages by providing insufficient reimbursements for automobile expenses incurred for the
purposes of delivering NPCs pizza and other food items. NPC filed a motion to dismiss the Second Amended Complaint on April 8, 2010.

On June 24, 2010, the Court granted NPCs motion to dismiss the Second Amended Complaint as to all claims filed by Plaintiff
Wass, all Plaintiffs who had opted in to the class and all putative class members. The only claim remaining is the individual claim of one remaining class representative, Mark Smith. The Courts Order did not grant Plaintiffs leave to amend the
Second Amended Complaint, but Plaintiffs filed a motion seeking leave to amend. NPC filed an opposition to the motion on July 27, 2010, and the motion is currently pending before the Court. As a result, at this time the Company is not able to
predict the outcome of the lawsuit, any possible loss or possible range of loss associated with the lawsuit or any potential effect on the Companys business, results of operations or financial condition. However, the Company believes the
lawsuit is wholly without merit and will defend itself from these claims vigorously.

Note 6  Derivative Financial Instruments

The Company participates in interest rate related derivative instruments to manage its exposure on its debt instruments, which
the Company designated as cash flow hedges. Gains and losses on derivative instruments designated as cash flow hedges are reported in other comprehensive income and reclassified into earnings in the periods in which earnings are impacted by the
hedged item. The following interest rate swap contracts were entered into as a hedge to fix a portion of the term loan notes under the Senior Secured Credit Facility and provide for fixed rates as compared to the three-month LIBOR rate on the
following notional amounts of floating rate debt at June 29, 2010:



|                  |  |                                |           |  |  |                |       |               |                   |  | 
|----------------- |  | ------------------------------ | --------- |  |  | -------------- | ----- | ------------- | ----------------- |  | 
|Effective Date    |  | Notional
Amount
(in thousands) |           |  |  | Fixed
RatePaid |       | Maturity Date |                   | 
|                  |  |                                |           |  |  |                |       |               |                   | 
|June 6, 2006      |  | $                              | 20,000(1) |  |  |                | 5.39% |               | December 31, 2010 | 
|January 31, 2008  |  |                                | 50,000    |  |  |                | 3.16% |               | January 31, 2011  | 
|April 7, 2008     |  |                                | 50,000    |  |  |                | 2.79% |               | April 7, 2011     | 
|November 18, 2008 |  |                                | 30,000    |  |  |                | 2.81% |               | November 18, 2011 | 
|                  |  |                                |           |  |  |                |       |               |                   | 
|                  |  | $                              | 150,000   |  |  |                |       |               |                   | 
|                  |  |                                |           |  |  |                |       |               |                   |  | 



| | (1) | The notional amounts amortized from $50.0 million to $20.0 million on December 31, 2009 based on the associated amortization schedule.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------

The following table presents the fair value of the Companys hedging portfolio as of June 29,
2010 and December 29, 2009 (in thousands):



|                       |  |                     |       |                      |   |       |  | 
|---------------------- |  | ------------------- | ----- | -------------------- | - | ----- |  | 
|Liability Derivatives  |  |                    
|Balance Sheet
Location |  | Fair Value          |      
|                       |  | June 29,      
2010 |       | December 29,    2009 |  
|                       |  |                     |       |                      |   |       | 
|Accrued liabilities    |  | $                   | 2,703 |                      | $ |      | 
|                       |  |                     |      
|Other deferred
items   |  | $                   | 906   |                      | $ | 5,536 |  | 



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##### Table of Contents

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



|                        |  |                                                                   |      |   |                       |   |                                                                     |                |  |          |                |                       |  |   |                       |   |                |  |  |                 |  |   |                |   |  |                |        |   |  |   |        |   |  |   |        |  
|----------------------- |  | ----------------------------------------------------------------- | ---- | - | --------------------- | - | ------------------------------------------------------------------- | -------------- |  | -------- | -------------- | --------------------- |  | - | --------------------- | - | -------------- |  |  | --------------- |  | - | -------------- | - |  | -------------- | ------ | - |  | - | ------ | - |  | - | ------ | -
|                        |  | LossRecognized in OCI onDerivative
Instruments(Effective Portion) |      |   |                       |   | LossReclassified fromAccumulated OCI intoIncome (Effective Portion) |               
|                        |  | For the 13 WeeksEnded                                             |      |   | For the 26 WeeksEnded |   |                                                                     |                |  | Location |                | For the 13 WeeksEnded |  |   | For the 26 WeeksEnded |  
|                        |  | June 29,  2010                                                    |      |   | June 30,  2009        |   |                                                                     | June 29,  2010 |  |          | June 30,  2009 |                       |  |   |                       |   | June 29,  2010 |  |  | June 30,  2009  |  |   | June 29,  2010 |   |  | June 30,  2009 |       
|Interest rate contracts |  | $                                                                 | (441 | ) |                       | $ | (595                                                                | )              |  | $        | (1,091         | )                     |  | $ | (1,391                | ) |                |  |  | Interestexpense |  | $ | (1,121         | ) |  | $              | (1,135 | ) |  | $ | (2,265 | ) |  | $ | (2,006 | )

The Company currently
estimates that earnings will be negatively impacted by approximately $3.0 million within the next twelve months, contemporaneously with the net settlement of the underlying interest payments, which may vary based on actual changes within the
LIBOR market rates.

The Company estimates the fair value of its interest rate swap contracts using independent market data
considered to be a Level 2 observable input. The Company uses a mark-to-market valuation based on observable interest rate yield curves which are adjusted for credit risk. During the second quarter of fiscal 2010 and 2009, there was virtually no
ineffectiveness related to cash flow hedges.

Note 7  Comprehensive Income

Comprehensive income is comprised of the following:



|                                                                 |  |                  |       |                  |   |                  |  |                  |        |  |   |       |  | 
|---------------------------------------------------------------- |  | ---------------- | ----- | ---------------- | - | ---------------- |  | ---------------- | ------ |  | - | ----- |  | 
|                                                                 |  | 13 Weeks Ended   |       | 26 Weeks Ended   |   |                 
|                                                                 |  | June 29,    2010 |       | June 30,    2009 |   | June 29,    2010 |  | June 30,    2009 |       
|Net income                                                       |  | $                | 5,120 |                  | $ | 3,357            |  | $                | 14,580 |  | $ | 9,320 | 
|Change in valuation of interest rate swap agreements, net of tax |  |                  | 680   |                  |   | 540              |  |                  | 1,174  |  |   | 615   | 
|                                                                 |  |                  |       |                  |   |                  |  |                  |        |  |   |       | 
|Comprehensive income                                             |  | $                | 5,800 |                  | $ | 3,897            |  | $                | 15,754 |  | $ | 9,935 | 
|                                                                 |  |                  |       |                  |   |                  |  |                  |        |  |   |       | 

Note 8  Related-Party Transactions

MLGPE Advisory Agreement.On May 3, 2006, the Company entered into an advisory agreement with an affiliate of MLGPE pursuant
to which such entity or its affiliates will provide advisory services to the Company. Under the agreement MLGPE or its affiliates will continue to provide financial, investment banking, management advisory and other services on the Companys
behalf for an annual fee of $1.0 million. The Company has paid $1.0 million to MLGPE for this fee for fiscal 2010 and fiscal 2009, which is being amortized ratably to expense.

Bank of America Merchant Services.In January 2009, Bank of America Corporation (BOA) acquired the parent company of
MLGPE, Merrill Lynch & Co., Inc. During both the 26 weeks ended June 29, 2010 and June 30, 2009, the Company paid Bank of America Merchant Services, an affiliate of BOA, $0.2 million for credit card processing services.

Bank of America, N.A.In December 2009, the Company opened a money market account with Bank of America, N.A., an affiliate of BOA,
to invest any excess cash balances on hand. As of June 29, 2010, the Company had $22.8 million invested in this account. These investments are trading securities, which are included in cash and cash equivalents, and the fair value of the
investment was determined using independent market data considered to be a Level 2 observable input.

Participation in
Senior Secured Credit Facility. Bank of America, N.A., an affiliate of BOA, and Merrill Lynch Capital Corporation (MLCC), an affiliate of MLGPE, were active participants in the Companys Senior Secured Credit Facility. As of
June 29, 2010, Bank of America, N.A., held $1.9 million, or 1.0%, of the term loan notes outstanding and $12.5 million, or 16.7%, of the revolving credit facility, and MLCC held $7.5 million, or 10.0%, of the revolving credit facility. The
Company had no amounts outstanding on the revolving credit facility as of June 29, 2010.



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Note 9  New Accounting Pronouncements

In January 2010, the Financial Accounting Standards Board (FASB) issued ASU No. 2010-06, Fair Value Measurements and
Disclosures (ASU 2010-06), which amends ASC 820 and requires additional disclosure related to recurring and non-recurring fair value measurements in respect of transfers in and out of Levels 1 and 2 and activity in Level 3 fair
value measurements. The update also clarifies existing disclosure requirements related to the level of disaggregation and disclosure about inputs and valuation techniques. ASU 2010-06 is effective for interim and annual periods beginning after
December 15, 2009 except for disclosures related to activity in Level 3 fair value measurements which are effective for fiscal years beginning after December 15, 2010 and for interim periods within those fiscal years. The Company does not
expect the provisions of ASU 2010-06 to have a material effect on the financial position, results of operations or cash flows of the Company.



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##### Table of Contents

|Item 2. | Managements Discussion and Analysis of Financial Condition and Results of Operations
|------- | -------------------------------------------------------------------------------------

Cautionary Statement Regarding Forward Looking Information

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



| |  |  | competitive conditions;
| | - |  | -----------------------



| |  |  | general economic and market conditions;
| | - |  | ---------------------------------------



| |  |  | effectiveness of franchisor advertising programs and the overall success of the franchisor;
| | - |  | -------------------------------------------------------------------------------------------



| |  |  | increases in food, labor, fuel and other costs;
| | - |  | -----------------------------------------------



| |  |  | effectiveness of the hedging program for cheese prices directed by the Unified Foodservice Purchasing Co-op (UFPC);
| | - |  | ---------------------------------------------------------------------------------------------------------------------



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



| |  |  | changes in consumer tastes, geographic concentration and demographic patterns;
| | - |  | ------------------------------------------------------------------------------



| |  |  | consumer concerns about health and nutrition;
| | - |  | ---------------------------------------------



| |  |  | our ability to manage our growth and successfully implement our business strategy;
| | - |  | ----------------------------------------------------------------------------------



| |  |  | the effect of disruptions to our computer and information systems;
| | - |  | ------------------------------------------------------------------



| |  |  | the effect of local conditions, events and natural disasters;
| | - |  | -------------------------------------------------------------



| |  |  | general risks associated with the restaurant industry;
| | - |  | ------------------------------------------------------



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



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



| |  |  | the loss of our executive officers and certain key personnel;
| | - |  | -------------------------------------------------------------



| |  |  | our ability to service our substantial indebtedness;
| | - |  | ----------------------------------------------------



| |  |  | restrictions contained in our debt agreements;
| | - |  | ----------------------------------------------



| |  |  | availability, terms and deployment of capital;
| | - |  | ----------------------------------------------



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



| |  |  | and, various other factors beyond our control.
| | - |  | ----------------------------------------------

Consequently, such forward-looking statements should be regarded solely as our current plans, estimates and beliefs. We do not intend,
and do not undertake, any obligation to update any forward looking statements to reflect future events or circumstances after the date of such statements. For a more detailed discussion of the principal factors that could cause actual results to be
materially different, investors should read our risk factors in Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 29, 2009 (2009 Form 10-K) as well as our unaudited condensed consolidated financial
statements, related notes, and other financial information appearing elsewhere in this report and our other filings with the Securities and Exchange Commission.



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##### Table of Contents

Overview

Who We Are.We are the largest Pizza Hut franchisee and the largest franchisee of any restaurant concept in the United States
according to the 2009 Top 200 Restaurant Franchisees by Franchise Times. We were founded in 1962 and, as of June 29, 2010 we operated 1,145 Pizza Hut units in 28 states with significant presence in the Midwest, South and
Southeast. As of the second quarter 2010, our operations represented approximately 19% of the domestic Pizza Hut restaurant system and 21% of the domestic Pizza Hut franchised restaurant system as measured by number of units, excluding licensed
units which operate with a limited menu and no delivery in certain of our markets.

Our Fiscal Year.We operate on a
52- or 53-week fiscal year ending on the last Tuesday in December. Fiscal year 2010 and 2009 each contains 52 weeks.

Our Sales

Net Product Sales.Net product sales are comprised of sales of food and beverages from our restaurants, net of
discounts. For the 26 weeks ended June 29, 2010, pizza sales accounted for approximately 78% of net product sales. Various factors influence sales at a given unit, including customer recognition of the Pizza Hut brand, our level of service and
operational effectiveness, pricing, marketing and promotional efforts and local competition. Several factors affect our sales in any period, including the number of units in operation, comparable store sales and seasonality. Comparable store
sales refer to period-over-period net product sales comparisons for units under our operation for at least 12 months.

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

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

Restaurant formats. We
operate our Pizza Hut restaurants through three different formats to cater to the needs of our customers in each respective market. Delivery units, or Delcos, are typically located in strip centers and provide delivery and carry-out,
with a greater proportion being located in more densely populated areas. Red Roof units, or RRs, are traditional free-standing, dine-in restaurants which offer on-location dining room service as well as carry-out service.
Restaurant-Based Delivery units, or RBDs, conduct delivery, dine-in, and carry-out operations from the same free-standing location. Approximately 45% of our units include the WingStreet product line at June 29, 2010. The
WingStreet menu includes bone-in and bone-out fried chicken wings which are tossed in one of eight sauces and appetizers which are available for dine-in, carry-out and delivery.

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



|                                                                                                                                   |  |                             |  |                               |  | 
|---------------------------------------------------------------------------------------------------------------------------------- |  | --------------------------- |  | ----------------------------- |  | 
|                                                                                                                                   |  | 26 Weeks EndedJune 29, 2010 |  | 26 Weeks Ended  June 30, 2009 |  | 
|Sales by occasion:                                                                                                                 |  |                             |  |                               | 
|Delivery                                                                                                                           |  | 38%                         |  | 41%                           | 
|Carryout                                                                                                                           |  | 45%                         |  | 39%                           | 
|Dine-in                                                                                                                            |  | 17%                         |  | 20%                           | 
|Number of restaurants open at the end of the period:                                                                               |  |                             |  |                               | 
|Delco                                                                                                                              |  | 429                         |  | 432                           | 
|RR                                                                                                                                 |  | 182                         |  | 188                           | 
|RBD                                                                                                                                |  | 534                         |  | 533                           | 
|                                                                                                                                   |  |                             |  |                               | 
|                                                                                                                                   |  | 1,145(1)                    |  | 1,153(1)                      | 
|                                                                                                                                  
|(1)     
Includes 513 units and 500 units offering the WingStreet product line, at June 29, 2010 and June 30, 2009, respectively.



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##### Table of Contents

Our Costs

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

Cost of sales.Cost of sales includes the cost of food and beverage products sold, less rebates from suppliers, as well as paper
and packaging, and is primarily influenced by fluctuations in commodity prices. Historically, our cost of sales has primarily been comprised of the following: cheese: 30-35%; dough: 16-19%; meat: 13-17%; and packaging: 8-10%. These costs can
fluctuate from year-to-year given the commodity nature of the cost category, but are constant across regions. We are a member of the UFPC, a cooperative set up to act as a central procurement service for the operators of Yum! Brands, Inc.
restaurants, and participate in various cheese hedging and procurement programs that are directed by the UFPC for cheese, meat and certain other commodities to help reduce the price volatility of those commodities from period-to-period. Based on
information provided by the UFPC, the UFPC expects to hedge approximately 30% to 50% of the Pizza Hut systems anticipated cheese purchases through a combination of derivatives taken under the direction of the UFPC.

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

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

Included within other
restaurant operating expenses are royalties paid to Pizza Hut, Inc. (PHI). Our blended average royalty rate for the year-to-date periods of both 2010 and 2009 was 4.8% of total sales.

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

Trends and Uncertainties Affecting Our Business

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

General Economic Conditions and Consumer Spending

Consumers continue to face high unemployment rates, lower home values and a more stringent credit environment. Low consumer confidence as
a result of these changes within the economic environment has caused the consumer to experience a real and perceived reduction in disposable income which has negatively impacted consumer spending in most segments of the restaurant industry,
including the segment in which we compete. While general economic conditions appear to be stabilizing, we believe pressures on low and lower-middle income customers continue to be significant, and we believe that these customers are particularly
interested in receiving value at a reasonable price in the current environment.

Competition

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

Commodity Prices

Commodity prices of packaging products (liner board) and ingredients such as cheese, dough (wheat), and meat, can vary. The prices of
these commodities can fluctuate throughout the year due to changes in supply and demand. Our costs can also fluctuate as a result of changes in ingredients or packaging instituted by PHI.



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##### Table of Contents

Overall, our total commodity costs were higher during the second quarter of 2010 than the
prior year, largely due to higher meat costs which were partially offset by a decline in the average block cheese price. The average meat price for the second quarter of 2010 increased $0.35 per pound or 23% as compared to the second quarter of
2009. The average block cheese price was $1.42 per pound for the second quarter of fiscal 2010, an increase of $0.26 or 22% versus the average price for the second quarter of 2009.

Labor Cost

The
restaurant industry is labor intensive and known for having a high level of employee turnover given low hourly wages and the part-time composition of the workforce. To the extent that our delivery sales mix increases due to acquisition of units or
customer preference, our labor costs would be expected to increase due to the more labor intensive nature of the delivery transaction. Direct labor is highly dependent on federal and state minimum wage rate legislation given the vast majority of
workers are hourly employees whose compensation is either determined or influenced by the minimum wage rate. There has been legislation passed in recent years to increase certain states and federal minimum wage rates. This has resulted in
incremental direct labor expense which we have attempted to mitigate through pricing initiatives, productivity improvement in our restaurants, better overall wage management tactics and other auxiliary cost reduction strategies. The federal tipped
wage rate remained unchanged at $2.13 per hour. The expected impact on our direct labor costs for these changes is described below under Inflation and Deflation.

The federal government and several state governments have proposed or enacted legislation regarding health care, including legislation
that in some cases requires employers to either provide health care coverage to their full-time employees, pay a penalty or pay into a fund that would provide coverage for them. We are currently evaluating the effects on our business of the Patient
Protection and Affordable Care Act, which was signed into law on March 23, 2010, and the related Health Care and Education Reconciliation Act of 2010, which was signed into law on March 30, 2010 (collectively, the Federal Health Care
Acts). The provisions of the Federal Health Care Acts having the greatest potential financial impact on us are scheduled to become effective in 2014. Based upon our current evaluation, we expect that the Federal Health Care Acts will
likely increase our future costs and could have a material adverse effect on our business, results of operations and financial condition, but we are currently unable to quantify the amount of the impact with any degree of certainty.

Additionally, potential changes in federal labor laws, including the possible enactment of the Employee Free Choice Act
(EFCA), could result in portions of our workforce being subjected to greater organized labor influence. The EFCA, also referred to as the card check bill, if passed in its current form could significantly change the nature of
labor relations in the United States, specifically, how union elections and contract negotiations are conducted. Although we do not currently have union employees, the EFCA could impose more requirements and union activity on our business, thereby
potentially increasing our costs, and could have a material adverse effect on our business, results of operations and financial condition.

Inflation and Deflation

Inflationary factors, such as increases in food and labor costs, directly affect our operations. Because most of our employees are paid on
an hourly basis, changes in rates related to federal and state minimum wage and tip credit laws will affect our labor costs. We currently estimate that the rollover impact of the July 24, 2009 federal minimum wage increase will be approximately
$3.0 million for fiscal year 2010. We are not always able to offset higher food, labor, fuel and other costs with price increases.

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

Critical
Accounting Policies and Estimates

Our discussion and analysis of our financial condition and results of operations are
based upon our unaudited Condensed Consolidated Financial Statements. The preparation of these financial statements requires estimation and judgment that affect the reported amounts of revenues, expenses, assets, and liabilities. We base our
estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not
readily apparent from other



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sources. If these estimates differ materially from actual results, the impact on the unaudited Condensed Consolidated Financial Statements may be material. Our critical accounting policies are
available in Item 7 of our 2009 Form 10-K. There have been no significant changes with respect to these policies during the first 26 weeks of fiscal 2010 except as described below.

Accounting for Goodwill. The Company has one operating segment and reporting unit for purposes of evaluating goodwill for
impairment. Goodwill was $191.7 million as of June 29, 2010 and December 29, 2009, respectively.

Goodwill primarily
originated with the acquisition of the Company by a new controlling shareholder in May 2006. Additional goodwill was recorded in connection with multiple acquisitions of Pizza Hut units since 2006.

We evaluate goodwill for impairment annually and at any other date when events or changes in circumstances indicate that potential
impairment is more likely than not and that the carrying amount of goodwill may not be recoverable.

The goodwill impairment
test involves a two-step process. The first step is a comparison of the reporting units fair value to its carrying value. If the carrying value exceeds fair value, goodwill is considered potentially impaired and we must complete the second
step of the goodwill impairment test. Under step two, the implied fair value of the reporting units goodwill is compared with the carrying amount of the reporting units goodwill. If the carrying amount of goodwill is greater than the
implied fair value of goodwill, an impairment loss would be recognized in an amount equal to the excess. The implied fair value of goodwill is calculated in the same manner as the amount of goodwill that is recognized in a business combination by
allocating fair value to all assets and liabilities (both recognized and unrecognized). The difference between the fair value and the sum of the amounts that are assigned to recognized and unrecognized assets and liabilities is the implied value of
goodwill.

Three calculation methodologies are considered when determining fair value of the reporting unit: the asset
approach, the market approach and the income approach. The asset approach was not used as we have significant intangible value that is dependent on our cash flow. The market approach was not used due to deficiencies in the quality and quantity of
comparable company data. The income approach explicitly recognizes that the current value of an investment or asset is premised upon the expected receipt of future economic benefits. When applied to a business ownership interest, a value indication
is developed by discounting expected cash flows to their present value at a rate of return that incorporates the risk-free rate for the use of the funds, the expected rate of inflation, and the risk associated with the particular investment. The
discount rate selected is generally based on the rates of return available from alternative investments of similar type and quality as of the valuation date. The discounted cash flow method provides an indication of value by discounting future net
cash flows available for distribution to their present worth at a rate that reflects both the current requirement of the market and the risk inherent in the specific investment. The income approach was used to determine our fair value.

Management judgment is a significant factor in determining whether an indicator of impairment has occurred. Management relies on
estimates in determining the fair value of each reporting unit, which include the following critical quantitative factors:

Anticipated future cash flows and terminal value for each reporting unit.The income approach to determining fair value relies on
the timing and estimates of future cash flows, including an estimate of terminal value. The projections use managements estimates of economic and market conditions over the projected period including growth rates in sales and estimates of
expected changes in operating margins. Our projections of future cash flows are subject to change if actual results are achieved that differ from those anticipated. We do not expect actual results to vary such that there would be a material change
to the estimated fair value of our reporting unit.

Selection of an appropriate discount rate.The income approach
requires the selection of an appropriate discount rate, which is based on a weighted average cost of capital analysis. The discount rate is subject to changes in short-term interest rates and long-term yield as well as variances in the typical
capital structure of marketplace participants in the quick service restaurant industry. The discount rate is determined based on assumptions that would be used by marketplace participants, and for that reason, the capital structure of selected
marketplace participants was used in the weighted average cost of capital analysis. Given the current volatile economic conditions, it is possible that the discount rate could change.

We completed our annual impairment testing during the second quarter of 2010 and determined that goodwill was not impaired. A key
assumption on our fair value estimate using the income approach is the discount rate. We selected a weighted average cost of capital of 10.8%.



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Recently Issued Accounting Statements and Pronouncements

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



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##### Table of Contents

Results of Operations

The table below presents (i) comparable store sales indices and (ii) selected restaurant operating results as a percentage of
net product sales for the 13-week and 26-week periods ended June 29, 2010 and June 30, 2009, respectively:



|                                      |  |                |  |               |  |                |  |               |  |               |  | 
|------------------------------------- |  | -------------- |  | ------------- |  | -------------- |  | ------------- |  | ------------- |  | 
|                                      |  | 13 Weeks Ended |  |               |  | 26 Weeks Ended |  |              
|                                      |  | June 29, 2010  |  | June 30, 2009 |  |                |  | June 29, 2010 |  | June 30, 2009 | 
|Comparable store sales                |  | 10.4%          |  | (12.6)%       |  |                |  | 10.3%         |  | (8.8)%        | 
|Net product
sales                     |  | 100%           |  | 100%          |  |                |  | 100%          |  | 100%          | 
|Direct restaurant costs and expenses: |  |                |  |               |  |                |  |               |  |               | 
|Cost of sales                         |  | 30.5%          |  | 26.8%         |  |                |  | 30.3%         |  | 26.8%         | 
|Direct labor                          |  | 30.0%          |  | 30.5%         |  |                |  | 29.8%         |  | 30.2%         | 
|Other restaurant operating expenses   |  | 31.6%          |  | 34.4%         |  |                |  | 31.2%         |  | 33.9%         | 

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



|                                           |  |                            |  |  |  |                            |  | 
|------------------------------------------ |  | -------------------------- |  |  |  | -------------------------- |  | 
|                                           |  | 26
WeeksEndedJune 29, 2010 |  |  |  | 26
WeeksEndedJune 30, 2009 |  | 
|Beginning of period                        |  | 1,149                      |  |  |  | 1,098                      | 
|Developed(1)                               |  |                           |  |  |  | 3                          | 
|Acquired(2)                                |  |                           |  |  |  | 105                        | 
|Sold                                       |  |                           |  |  |  | (42)                       | 
|Closed(1) (2)                              |  | (4)                        |  |  |  | (11)                       | 
|                                           |  |                            |  |  |  |                            | 
|End of period                              |  | 1,145                      |  |  |  | 1,153                      | 
|                                           |  |                            |  |  |  |                            | 
|Equivalent units,
continuing operations(3) |  | 1,146                      |  |  |  | 1,141                      | 



| | (1) | For the 26 weeks ended June 30, 2009 three units were relocated or rebuilt and are included in both the developed and closed total above. | 
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------- | 

| | (2) | Includes one unit acquired during the 26 weeks ended June 30, 2009 that
was closed immediately upon purchase. | 
| | --- | ------------------------------------------------------------------------------------------------------------- | 

| | (3) | Equivalent units represent the number of units open at the beginning of a
given period, adjusted for units opened, closed, acquired or sold during the period on a weighted average basis. | 
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | 

We had 513 units offering the WingStreet product line at
June 29, 2010 and did not have any WingStreet development during the 26 weeks ended June 29, 2010.

Thirteen Weeks Ended
June 29, 2010 Compared to June 30, 2009

Net Product Sales.Net product sales for the second quarter
of 2010 compared to 2009, were $236.0 million and $214.3 million, respectively, an increase of $21.7 million, or 10.1%, resulting largely from a comparable store sales increase of 10.4% for the second quarter of 2010, rolling over last years
second quarter comparable store sales decrease of 12.6% and a 0.8% decrease in equivalent units. The improved comparable store sales results are largely a result of our $10 Any Pizza promotion.

Fees and Other Income.Fees and other income were $10.8 million for the second quarter of 2010, compared to $9.5 million for the
prior year, for an increase of $1.3 million or 14.4%. The increase was due to higher customer delivery charge income from increased delivery transactions.

Cost of Sales.Cost of sales was $71.9 million for the second quarter of 2010, compared to $57.4 million for the prior year for an
increase of $14.5 million or 25.2%. Cost of sales increased 3.7%, as a percentage of net product sales, to 30.5%, compared to 26.8% in the prior year. This increase was largely due to pricing and product mix changes due to the $10 Any Pizza
promotion as well as higher ingredient costs. With the $10 Any Pizza promotion, we realized a shift in both pizza size and toppings, which resulted in a higher level of sales of large and specialty (3+ topping) pizzas than when compared to prior
periods. Because the $10 price point is significantly less than historical promotions for this type of product, it has resulted in a higher cost of sales percentage as compared to prior periods.



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##### Table of Contents

Direct Labor.Direct labor costs for the second quarter of 2010 and 2009 were $70.8
million and $65.3 million, respectively, an increase of $5.5 million, or 8.4%. Direct labor costs were 30.0% of net product sales for the second quarter of 2010, a 0.5% decrease compared to the prior year. The favorable variance was primarily due to
the leveraging impact on fixed and semi-fixed labor costs as a result of the comparable store sales increase which was partially offset by increased average wage rates (approximately 60 basis points) related to the July 2009 minimum wage increase.

Other Restaurant Operating Expenses.Other restaurant operating expenses for the 13 weeks ended June 29, 2010 and
June 30, 2009 were $74.6 million and $73.8 million, respectively, an increase of $0.8 million, or 1.0%. Other operating expenses were 31.6% of net product sales for the second quarter of 2010 compared to 34.4% of net product sales for the same
period of the prior year, a decrease of 2.8%.

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



|                                                                                                              |  |      |  
|------------------------------------------------------------------------------------------------------------- |  | ---- | -
|Other restaurant operating expenses as a percentage of net product sales for the 13 weeks ended June 30,
2009 |  | 34.4 | %
|Depreciation expense                                                                                          |  | (1.3 | )
|Rent and occupancy costs                                                                                      |  | (1.0 | )
|Delivery driver insurance costs                                                                               |  | (0.3 | )
|Telephone expense                                                                                             |  | (0.3 | )
|Outsourced call center costs brought in-house                                                                 |  | (0.2 | )
|Restaurant manager bonuses                                                                                    |  | 0.3  |  
|Delivery driver reimbursements                                                                                |  | 0.3  |  
|Other, net                                                                                                    |  | (0.3 | )
|                                                                                                              |  |      |  
|Other restaurant operating expenses as a percentage of net product sales for the 13 weeks ended June 29,
2010 |  | 31.6 | %
|                                                                                                              |  |      |  

The favorable variance was largely due to the leveraging impact on fixed and semi-fixed costs, primarily
occupancy costs and depreciation, due to the comparable store sales increase, lower telephone expense and outsourced call center expenses for a certain acquisition market in the prior year which was brought in-house in late third quarter 2009. These
decreases were partially offset by increased delivery driver reimbursement expenses due to increased delivery transactions and higher fuel costs and increased restaurant manager bonuses.

Depreciation expense for store operations was $7.9 million or 3.3% of net product sales for the second quarter of 2010 compared to $9.9
million or 4.6% of net product sales for the prior year. The decrease in depreciation expense as compared to the prior year is largely due to short-lived assets from the 2008 and 2009 unit acquisitions becoming fully depreciated.

General and Administrative Expenses.General and administrative expenses for the 13 weeks ended June 29, 2010 were $12.3
million compared to $12.1 million for the 13 weeks ended June 30, 2009, an increase of $0.2 million or 1.7%. This increase is largely due to higher credit card transaction fees from increased sales volume of $0.4 million during the second
quarter of 2010 which were partially offset by non-recurring acquisition training costs of $0.2 million incurred in the second quarter of 2009.

Corporate Depreciation and Amortization.Corporate depreciation and amortization costs were $2.8 million and $2.9 million for the
second quarter of 2010 and 2009, respectively.

Other.We recorded expense of $0.4 million and $0.1 million for other
expenses during the second quarter of 2010 and 2009, respectively.

Interest Expense.Interest expense was $7.3 million
for the second quarter of 2010 compared to $7.8 million for the prior year, a decrease of $0.5 million due to lower average outstanding debt balances as compared to the prior year. Our cash borrowing rate increased 0.2% to 6.6% during the second
quarter of 2010 compared to the prior year and our average outstanding debt balance decreased $49.1 million to $402.6 million for the second quarter of 2010. Interest expense included $0.6 million and $0.5 million for amortization of deferred debt
issuance costs in the second quarter 2010 and 2009, respectively.

Income Taxes.For the 13 weeks ended June 29,
2010, we recorded income tax expense of $1.5 million which resulted in an effective income tax rate of 22.4% compared to an effective tax rate of 22.2%, or $1.0 million, for the 13 weeks ended June 30, 2009. The lower than statutory rates are
due to the impact of tax credits in relation to income before taxes for both years and a $0.4 million favorable discrete tax adjustment for federal tax credit carry back adjustments during the second quarter of 2009.



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##### Table of Contents

Net income.Net income for the 13 weeks ended June 29, 2010 was $5.1 million,
compared to $3.4 million for the prior year. The increase was primarily due to the benefit of a 10.1% increase in net product sales and increased customer delivery charge income which were partially offset by increased cost of sales, direct
labor costs and other restaurant operating expenses.

Twenty-Six Weeks Ended June 29, 2010 Compared to June 30, 2009-adjusted
for discontinued operations

Net Product Sales.Net product sales for the 26 weeks ended June 29, 2010 were
$488.6 million compared to $436.7 million for the same period of 2009, an increase of $51.9 million, or 11.9%, resulting largely from a comparable store sales increase of 10.3% for the 26 weeks ended June 29, 2010, rolling over last years
comparable store sales decline of 8.8%.

Fees and Other Income.Fees and other income were $22.7 million for the 26
weeks ended June 29, 2010, compared to $19.5 million for the prior year, for an increase of $3.2 million or 16.5%. The increase was due to higher customer delivery charge income from increased delivery transactions.

Cost of Sales.Cost of sales was $147.9 million for the 26 weeks ended June 29, 2010, compared to $117.0 million for the
prior year for an increase of $30.9 million or 26.5%. Cost of sales increased 3.5%, as a percentage of net product sales, to 30.3%, compared to 26.8% in the prior year. This increase was largely due to pricing and product mix changes due to the $10
Any Pizza promotion as well as higher ingredient costs, primarily meat. With the $10 Any Pizza promotion, we realized a shift in both pizza size and toppings, which resulted in a higher level of sales of large and specialty (3+ topping) pizzas than
when compared to prior periods. Because the $10 price point is significantly less than historical promotions for this type of product, it has resulted in a higher cost of sales percentage as compared to prior periods.

Direct Labor.Direct labor costs for the 26 weeks ended June 29, 2010 as compared to the prior year were $145.7 million and
$131.7 million, respectively, an increase of $14.0 million, or 10.6%. Direct labor costs were 29.8% of net product sales for the 26 weeks ended June 29, 2010, a 0.4% decrease compared to the prior year. The favorable variance was primarily due
to the leveraging impact on fixed and semi-fixed labor costs as a result of the comparable store sales increase which was partially offset by increased average wage rates (approximately 60 basis points) related to the July 2009 minimum wage
increase.

Other Restaurant Operating Expenses.Other restaurant operating expenses for the 26 weeks ended
June 29, 2010 as compared to the prior year were $152.6 million and $148.0 million, respectively, an increase of $4.6 million, or 3.1%. Other operating expenses were 31.2% of net product sales for the 26 weeks ended June 29, 2010 compared
to 33.9% of net product sales for the prior year, a decrease of 2.7%.

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



|                                                                                                              |  |      |  
|------------------------------------------------------------------------------------------------------------- |  | ---- | -
|Other restaurant operating expenses as a percentage of net product sales for the 26 weeks ended June 30,
2009 |  | 33.9 | %
|Depreciation expense                                                                                          |  | (1.2 | )
|Rent and occupancy costs                                                                                      |  | (1.1 | )
|Telephone expense                                                                                             |  | (0.3 | )
|Outsourced call center costs brought in-house                                                                 |  | (0.2 | )
|Delivery driver reimbursements                                                                                |  | 0.3  |  
|Restaurant manager bonuses                                                                                    |  | 0.2  |  
|Other, net                                                                                                    |  | (0.4 | )
|                                                                                                              |  |      |  
|Other restaurant operating expenses as a percentage of net product sales for the 26 weeks ended June 29,
2010 |  | 31.2 | %
|                                                                                                              |  |      |  

The favorable variance was largely due to the leveraging impact on fixed and semi-fixed costs, primarily
depreciation and occupancy costs, due to the comparable store sales increase, lower telephone expense and outsourced call center expenses for a certain acquisition market in the prior year which was brought in-house in late third quarter 2009. These
decreases were partially offset by increased delivery driver reimbursement expenses due to increased delivery transactions and higher fuel costs and higher restaurant manager bonuses.

Depreciation expense for store operations was $16.1 million or 3.3% of net product sales for the 26 weeks ended June 29, 2010
compared to $19.6 million or 4.5% of net product sales for the prior year. The decrease in depreciation expense as compared to the prior year is largely due to short-lived assets from the 2008 and 2009 unit acquisitions becoming fully depreciated.



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General and Administrative Expenses.General and administrative expenses for the 26
weeks ended June 29, 2010 were $24.4 million compared to $24.8 million for the prior year, a decrease of $0.4 million or 1.3%. This decrease is largely due to a reduction in certain employee related compensation expenses, which may be
reinstated on a discretionary basis based on fiscal 2010 operating results, and targeted headcount reductions of approximately $0.8 million. Additionally, increased credit card transaction fees from higher sales volume in the current year of $0.9
million were partially offset by $0.5 million for non-recurring acquisition integration costs incurred in the first half of 2009.

Corporate Depreciation and Amortization.Corporate depreciation and amortization costs were $5.7 million and $5.9 million for the
26 weeks ended June 29, 2010 and June 30, 2009, respectively.

Other.We recorded expense of $0.8 million for
other expenses for both year-to-date periods of 2010 and 2009, respectively. Included in this category for the 26 weeks ended June 30, 2009 were direct acquisition costs which were required to be expensed under accounting guidance for business
combinations effective for fiscal year 2009 of $0.4 million.

Interest Expense.Interest expense was $14.9 million for
the 26 weeks ended June 29, 2010 compared to $15.7 million for the prior year, a decrease of $0.8 million due to lower average outstanding debt balances as compared to the prior year. Our cash borrowing rate for the 26 weeks ended June 29,
2010 was flat as compared to the prior year at 6.4%, however, our average outstanding debt balance decreased $36.5 million to $418.0 million for the first half of 2010 largely due to the payment of our mandatory excess cash flow pre-payment of $31.3
million during the first quarter of 2010. Interest expense included $1.3 million and $1.0 million for amortization of deferred debt issuance costs for the 26 week periods of 2010 and 2009, respectively.

Income Taxes.For the 26 weeks ended June 29, 2010, we recorded income tax expense of $4.8 million which resulted in an
effective income tax rate of 24.6% compared to an effective tax rate of 24.2%, or $3.0 million, for the prior year. The lower than statutory rates for both years were due to the impact of tax credits in relation to income before taxes. The 26 weeks
ended June 30, 2009 included favorable discrete tax adjustments of $1.0 million ($0.6 million for state tax rate adjustment and $0.4 million for federal tax credit carry back adjustments).

Income from Continuing Operations, net of taxes.Income from continuing operations for the 26 weeks ended June 29, 2010 was
$14.6 million, compared to $9.4 million for the prior year. The increase was primarily due to the benefit of an 11.9% increase in net product sales, increased customer delivery charge income and lower interest expense which were partially
offset by increases in cost of sales, restaurant operating expenses and direct labor and higher income tax expense.



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Liquidity and Sources of Capital

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

Any additional debt incurred, beyond the parameters established in our current credit agreement, or refinancing of any of our existing
indebtedness may result in increased borrowing costs that are in excess of our current borrowing costs based on current credit market conditions. We will continue to evaluate the credit markets as we assess the future potential refinancing of our
existing credit facility and our acquisition and other growth opportunities.

Our working capital was a deficit of $38.8
million at June 29, 2010. Like many other restaurant companies, we are able to operate and generally do operate with a working capital deficit. We are able to operate with a working capital deficit because (i) restaurant revenues are
received primarily in cash or by credit card with a low level of accounts receivable; (ii) rapid turnover results in a limited investment in inventories; and (iii) cash from sales is usually received before related liabilities for food,
supplies and payroll become due. Because we are able to operate with a working capital deficit, we have historically utilized excess cash flow from operations for debt reduction, capital expenditures and acquisitions, and we have used our revolving
line of credit to provide liquidity for our working capital needs. At June 29, 2010, we had $58.1 million of borrowing capacity available under our revolving line of credit net of $16.9 million of outstanding letters of credit.

Cash flows from operating activities

Cash from operations is our primary source of funds. Changes in earnings and working capital levels are the two key factors that
generally have the greatest impact on cash from operations. Our operating activities provided net cash inflows of $50.1 million for the 26 weeks ended June 29, 2010 compared to $39.7 million for the prior year. Cash flows from operations during
the 26 weeks ended June 29, 2010 were positively impacted by a $9.3 million increase from net changes in working capital and a $1.7 million positive impact of after tax cash flows from operations (after adding back non-cash items to net income)
as compared to the prior year.

Cash flows from investing activities

Cash flows used in investing activities were $6.6 million during the 26 weeks ended June 29, 2010 compared to
$27.6 million for the 26 weeks ended June 30, 2009. For the first half of 2010, we invested $8.6 million in capital expenditures. Additionally, we received proceeds of $2.1 million from asset sales as PHI exercised its option to purchase five
assets which were part of the fiscal 2008 and 2009 sale transactions. During 2009, we completed an asset purchase and sale transaction with PHI in which we purchased 55 units for $18.7 million and sold 42 units for $19.5 million. We also completed
an acquisition of 50 units for $14.2 million. During the first half of 2009 we invested $14.8 million in capital expenditures, consisting of approximately $9.4 million in our existing operations (including approximately $0.6 million for WingStreetdevelopment at 26 units) and $5.4 million for
acquisition related information technology equipment.

Cash flows from financing activities

Net cash outflows for financing activities were $31.4 million for the 26 weeks ended June 29, 2010 compared to $11.3 million for the
26 weeks ended June 30, 2009. We are required, under certain circumstances as defined in our credit agreement, to make an excess cash flow mandatory prepayment on our term loan notes not later than 120 days after each fiscal
year-end. During the first quarter of 2010, we paid our mandatory excess cash flow prepayment of $31.3 million on our senior secured credit facility utilizing cash reserves. The mandatory prepayment during 2009 was made in the second quarter
last year and totaled $17.1 million. We had no net activity on our revolving credit facility during the first half of 2010 compared to net borrowings of $2.0 million for the first half of 2009. During the first half of 2009 we completed
sale-leaseback transactions for six properties acquired in Virginia during the fourth quarter of 2008 for $2.9 million and completed sale-leaseback transactions on two formerly leased properties (purchased in 2008) for $0.9 million.



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Based on currently expected 2010 results, we anticipate that we will be required to make a
mandatory prepayment of an amount between $23 million and $28 million depending upon the amount of excess cash flow generated during our fiscal year and our leverage at fiscal year-end. The excess cash flow mandatory prepayment is an annual
requirement under the credit agreement. As the excess cash flow mandatory prepayment is an estimate, the final excess cash flow mandatory prepayment could ultimately differ materially from the amounts reflected above and as such we
have not reflected any of this estimate as a current liability.

As of June 29, 2010, we were in compliance with all of
the financial covenants under our senior secured credit facility. Further, as shown in the following table, our financial leverage ratio has declined from 4.51x at fiscal 2009 year end to 4.11x as a result of our $31.3 million payment on our senior
secured credit facility and improved operating results. Our ratios under the foregoing financial covenants in our credit agreement as of June 29, 2010 were as follows:



|                                |  |        |  |                      |  | 
|------------------------------- |  | ------ |  | -------------------- |  | 
|                                |  | Actual |  | Covenant Requirement |  | 
|                                |  |        |  |                      | 
|Maximum leverage ratio          |  | 4.11x  |  | Not more than 4.75x  | 
|Minimum interest coverage ratio |  | 1.89x  |  | Not less than 1.70x  |  | 

Based upon the provisions of our credit agreement, the financial covenants applicable to the
Company adjust based on the following schedule:



|                                      |  |              
|------------------------------------- |  | -------------
|Maximum total leverage ratio          |  | LeverageRatio
|December 30, 2009 - December 28, 2010 |  | 4.75x        
|December 29, 2010 - December 27, 2011 |  | 4.25x        
|December 28, 2011 and thereafter      |  | 4.00x        
|                                      | 
|Minimum interest coverage ratio       |  | CoverageRatio
|December 30, 2009 - June 29, 2010     |  | 1.70x        
|June 30, 2010 and thereafter          |  | 1.75x        

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

Based upon current operations, we believe that our cash flows from operations, together with borrowings that are available under the
revolving credit facility portion of our senior secured credit facility, will be adequate to meet our anticipated requirements for working capital, capital expenditures, and scheduled principal and interest payments through the next 12 months. At
June 29, 2010, we had $58.1 million of borrowing capacity available under our revolving line of credit net of $16.9 million of outstanding letters of credit. We will consider additional sources of financing to fund our long-term growth if
necessary, including the remaining $60.0 million of term loan capacity available under our existing credit facility.

Non-GAAP measures

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



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##### Table of Contents

|                                             |  |                |        |                |   |               |  |               |        |  |   |       
|-------------------------------------------- |  | -------------- | ------ | -------------- | - | ------------- |  | ------------- | ------ |  | - | ------
|                                             |  | 13 Weeks Ended |        | 26 Weeks Ended
|                                             |  | June 29, 2010  |        | June 30, 2009  |   | June 29, 2010 |  | June 30, 2009
|Net income from continuing operations        |  | $              | 5,120  |                | $ | 3,357         |  | $             | 14,580 |  | $ | 9,379 
|Adjustments:                                 |  |                |        |                |   |               |  |               |        |  |   |       
|Interest expense                             |  |                | 7,349  |                |   | 7,819         |  |               | 14,874 |  |   | 15,743
|Income tax expense                           |  |                | 1,482  |                |   | 957           |  |               | 4,759  |  |   | 2,999 
|Depreciation and amortization                |  |                | 11,100 |                |   | 13,031        |  |               | 22,523 |  |   | 25,985
|Net facility impairment charges              |  |                | 437    |                |   | 100           |  |               | 844    |  |   | 251   
|Pre-opening expenses and other               |  |                | 224    |                |   | 362           |  |               | 508    |  |   | 1,086 
|                                             |  |                |        |                |   |               |  |               |        |  |   |       
|Adjusted EBITDA from continuing operations   |  |                | 25,712 |                |   | 25,626        |  |               | 58,088 |  |   | 55,443
|Adjusted EBITDA from discontinued operations |  |                |       |                |   |              |  |               |       |  |   | 142   
|                                             |  |                |        |                |   |               |  |               |        |  |   |       
|Adjusted EBITDA                              |  | $              | 25,712 |                | $ | 25,626        |  | $             | 58,088 |  | $ | 55,585
|                                             |  |                |        |                |   |               |  |               |        |  |   |       



|(1) | The Company defines Adjusted EBITDA as consolidated net income plus interest, income taxes, depreciation and amortization, facility impairment charges
and pre-opening expenses. Adjusted EBITDA is not a measure of financial performance under generally accepted accounting principles. Adjusted EBITDA has limitations as an analytical tool, and should not be considered in isolation from, or as a
substitute for analysis of, the Companys financial information reported under generally accepted accounting principles. Adjusted EBITDA as defined above may not be similar to EBITDA measures of other companies.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Letters of Credit

As
of June 29, 2010, we had letters of credit of $16.9 million issued under our existing credit facility in support of self-insured risks.



|Item 3. | Quantitative and Qualitative Disclosures About Market Risk
|------- | ----------------------------------------------------------

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

Interest Rate Risk. Our
primary market risk exposure is interest rate risk. All of our borrowings under our senior secured credit facility bear interest at a floating rate. As of June 29, 2010, we had $227.4 million in funded floating rate debt outstanding under our
senior secured credit facility. We have interest rate swap agreements that provide for fixed rates as compared to the three-month LIBOR rate on the following notional amounts of floating rate debt at June 29, 2010:



|               |  |                               |       |                |       |               |               |  | 
|-------------- |  | ----------------------------- | ----- | -------------- | ----- | ------------- | ------------- |  | 
|Effective Date |  | Notional
Amount
(in millions) |       | Fixed
RatePaid |       | Maturity Date |               | 
|               |  |                               |       |                |       |               |               | 
|June 6, 2006   |  | $                             | 20.0  |                | 5.39% |               | Dec. 31, 2010 | 
|Jan. 31, 2008  |  |                               | 50.0  |                | 3.16% |               | Jan. 31, 2011 | 
|April 7, 2008  |  |                               | 50.0  |                | 2.79% |               | April 7, 2011 | 
|Nov. 18, 2008  |  |                               | 30.0  |                | 2.81% |               | Nov. 18, 2011 | 
|               |  |                               |       |                |       |               |               | 
|               |  | $                             | 150.0 |                |       |               |               | 
|               |  |                               |       |                |       |               |               |  | 

After giving effect to these swaps, which leaves us with $77.4 million of floating rate debt, a
100 basis point increase in this floating rate would increase annual interest expense by approximately $0.8 million.

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

The estimated increase in our food costs from a hypothetical 10% adverse change in the average cheese block
price per pound (approximately $0.14 for the 26 weeks ended June 29, 2010 and $0.12 per pound for 2009) would have been approximately $3.6 million and $2.2 million for the 26 weeks ended June 29, 2010 and June 30, 2009,
respectively, without giving effect to the UFPC directed hedging programs.



25







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##### Table of Contents

|Item 4. | Controls and Procedures.
|------- | ------------------------

Evaluation
of Disclosure Controls and Procedures.

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

Changes in internal control over financial reporting.There has been no change in our internal control over financial reporting
that occurred during our second fiscal quarter of 2010 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.



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##### Table of Contents

PART II. OTHER INFORMATION



|Item 1. | Legal Proceedings.
|------- | ------------------

On
May 12, 2009, a lawsuit against the Company, entitled Jeffrey Wass, et al. v. NPC International, Inc., Case No. 2:09-CV-2254-JWL-KGS, was filed in the United States District Court for the District of Kansas. A First Amended Complaint,
entitled Jeffrey Wass and Mark Smith, et al. v. NPC International, Inc., was filed on July 2, 2009. The Complaint was brought by Plaintiffs Wass and Smith individually and on behalf of similarly situated employees who work or previously worked
as delivery drivers for NPC. The First Amended Complaint alleged a collective action under the Fair Labor Standards Act (FLSA) to recover unpaid wages and excessive deductions owed to plaintiffs and similarly situated workers employed by
NPC in 28 states, and as a class action under Colorado law on behalf of Plaintiff Smith and all other similarly situated workers employed by NPC in Colorado to recover unpaid minimum wages and excess payroll deductions and certain costs relating to
uniforms and special apparel. The First Amended Complaint alleged among other things that NPC deprived plaintiffs and other NPC delivery drivers of minimum wages by providing insufficient reimbursements for automobile and other job-related expenses
incurred for the purposes of delivering NPCs pizza and other food items.

On March 2, 2010, the Court entered an
Order granting NPCs motions for judgment on the pleadings as to all claims brought by plaintiffs in the First Amended Complaint, with the exception of a claim for the reimbursement of uniform costs under Colorado law. The Order provided that
the claims failed to state a claim under the FLSA and Colorado law and, therefore, would be dismissed with prejudice unless plaintiffs filed a Second Amended Complaint that cured the deficiencies in the First Amended Complaint. The Order also
operated to moot plaintiffs then-pending motion for conditional collective action certification.

Plaintiffs filed a
Second Amended Complaint on March 22, 2010, which alleged a collective action under the FLSA on behalf of plaintiffs and similarly situated workers employed by NPC in 28 states, and a class action under Rule 23 of the Federal Rules of Civil
Procedure on behalf of Plaintiff Smith and similarly situated workers employed in states in which the state minimum wage is higher than the federal minimum wage. The Second Amended Complaint contended that NPC deprived delivery drivers of minimum
wages by providing insufficient reimbursements for automobile expenses incurred for the purposes of delivering NPCs pizza and other food items. NPC filed a motion to dismiss the Second Amended Complaint on April 8, 2010.

On June 24, 2010, the Court granted NPCs motion to dismiss the Second Amended Complaint as to all claims filed by Plaintiff
Wass, all Plaintiffs who had opted in to the class and all putative class members. The only claim remaining is the individual claim of one remaining class representative, Mark Smith. The Courts Order did not grant Plaintiffs leave to amend the
Second Amended Complaint, but Plaintiffs filed a motion seeking leave to amend. NPC filed an opposition to the motion on July 27, 2010, and the motion is currently pending before the Court. As a result, at this time the Company is not able to
predict the outcome of the lawsuit, any possible loss or possible range of loss associated with the lawsuit or any potential effect on the Companys business, results of operations or financial condition. However, the Company believes the
lawsuit is wholly without merit and will defend itself from these claims vigorously.



|Item 1A. | Risk Factors.
|-------- | -------------

There have
been no material changes in our risk factors from those disclosed in our 2009 Form 10-K.



|Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds.
|------- | ------------------------------------------------------------

Not applicable.



|Item 3. | Defaults Upon Senior Securities.
|------- | --------------------------------

Not applicable.



|Item 4. | Reserved.
|------- | ---------



|Item 5. | Other Information.
|------- | ------------------

Not
applicable.



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##### Table of Contents

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized, on August 6, 2010.



NPC INTERNATIONAL, INC.By:

/s/ Troy D. CookName:

Troy D. CookTitle:

Executive Vice PresidentFinance,
Chief Financial Officer, Secretary and
Treasurer (Principal Financial Officer)By:

/s/ Susan G. DechantName:

Susan G. DechantTitle:

Vice PresidentAdministration and
Chief Accounting Officer (Principal
Accounting Officer)




28







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##### Table of Contents

|Item 6. | Exhibits, Financial Statement Schedules
|------- | ---------------------------------------

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

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



|            |  |                                                                                                                                                                                                                                                                                                      
|----------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Document Description                                                                                                                                                                                                                                                                                 
|            | 
|2.1*        |  | Stock Purchase Agreement dated as of March 3, 2006 among NPC Acquisition Holdings, LLC, NPC International, Inc. and the stockholders of NPC International, Inc. named
therein                                                                                                                        
|            | 
|2.2*        |  | Merger Agreement dated as of May 3, 2006 between Hawk-Eye Pizza, LLC and NPC Management, Inc.                                                                                                                                                                                                        
|            | 
|2.3         |  | Asset Sale Agreement by and between NPC International, Inc., Pizza Hut of America, Inc. and Pizza Hut, Inc. dated as of November 3, 2008 (incorporated herein by reference to
Exhibit 2.1 to the Companys Current Report on Form 8-K filed with the Commission on December 9, 2008)                 
|            | 
|2.4         |  | Asset Purchase and Sale Agreement by and between NPC International, Inc., Pizza Hut of America, Inc. and Pizza Hut, Inc. dated as of November 3, 2008 (incorporated herein by
reference to Exhibit 2.2 to the Companys Current Report on Form 8-K filed with the Commission on December 9, 2008)    
|            | 
|2.5         |  | Amendment to Asset Sale Agreement dated as of December 8, 2008 among NPC International, Inc., Pizza Hut of America, Inc. and Pizza Hut, Inc. (incorporated herein by reference
to Exhibit 2.3 to the Companys Current Report on Form 8-K filed with the Commission on December 9, 2008)             
|            | 
|2.6         |  | Amendment to Asset Purchase and Sale Agreement dated as of December 8, 2008 among NPC International, Inc., Pizza Hut of America, Inc. and Pizza Hut, Inc. (incorporated herein
by reference to Exhibit 2.4 to the Companys Current Report on Form 8-K filed with the Commission on December 8, 2008)
|            | 
|2.7         |  | Asset Purchase and Sale Agreement by and between NPC International, Inc., Pizza Hut of America, Inc. and Pizza Hut, Inc. dated as of December 15, 2008 (incorporated herein by
reference to Exhibit 2.5 to the Companys Current Report on Form 8-K filed with the Commission on January 20, 2009)   
|            | 
|2.8         |  | Asset Sale Agreement by and between NPC International, Inc., Pizza Hut of America, Inc. and Pizza Hut, Inc. dated as of January 13, 2009 (incorporated herein by reference to
Exhibit 2.6 to the Companys Current Report on Form 8-K filed with the Commission on February 17, 2009)                
|            | 
|2.9         |  | Amendment to Asset Sale Agreement dated as of February 12, 2009 between NPC International, Inc., Pizza Hut of America, Inc. and Pizza Hut, Inc. (incorporated herein by
reference to Exhibit 2.7 to the Companys Current Report on Form 8-K filed with the Commission on February 17, 2009)         
|            | 
|2.10        |  | Second Amendment to Asset Sale Agreement dated as of February 16, 2009 between NPC International, Inc., Pizza Hut of America, Inc. and Pizza Hut, Inc. (incorporated herein by
reference to Exhibit 2.8 to the Companys Current Report on Form 8-K filed with the Commission on February 17, 2009)  
|            | 
|3.1*        |  | Amended and Restated Articles of Incorporation of NPC International, Inc.                                                                                                                                                                                                                            
|            | 
|3.2*        |  | Bylaws of NPC International, Inc.                                                                                                                                                                                                                                                                    



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##### Table of Contents

|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                   
|----------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Document Description                                                                                                                                                                                                                                                                                                                                                                                                              
|            | 
|4.1*        |  | Indenture dated as of May 3, 2006 among NPC International, Inc., NPC Management, Inc. and Wells Fargo Bank, National Association, related to the issue of the 9 1/2%
Senior Subordinated Notes due 2014                                                                                                                                                                                                                           
|            | 
|4.2*        |  | Form of 9 1/2% Senior Subordinated Note due 2014 (included in Exhibit 4.1)                                                                                                                                                                                                                                                                                                                                                        
|            | 
|4.3*        |  | Registration Rights Agreement dated as of May 3, 2006 among NPC International, Inc., NPC Management, Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated and
J.P. Morgan Securities Inc.                                                                                                                                                                                                                                     
|            | 
|10.1*       |  | Hawk-Eye Interests Purchase Agreement, dated as of May 3, 2006, among NPC International, Inc., Oread Capital Holdings, LLC and Troy D. Cook                                                                                                                                                                                                                                                                                       
|            | 
|10.2*       |  | Credit agreement dated as of May 3, 2006 among NPC International, Inc., NPC Acquisition Holdings, LLC as a Guarantor, the other Guarantors party thereto, JPMorgan Chase Bank,
N.A., as Administrative Agent, Collateral Agent and Issuing Bank, Merrill Lynch, Pierce, Fenner & Smith Incorporated, as Syndication Agent, Bank of America, N.A. and Sun Trust Bank, as Co-Documentation Agents, and the Lenders signatory
thereto
|            | 
|10.4*       |  | Advisory Agreement, dated as of May 3, 2006, among NPC International, Inc., NPC Acquisition Holdings, LLC and Merrill Lynch Global Partners, Inc.                                                                                                                                                                                                                                                                                 
|            | 
|10.7*       |  | NPC International, Inc. Deferred Compensation and Retirement Plan                                                                                                                                                                                                                                                                                                                                                                 
|            | 
|10.8*       |  | NPC International, Inc. POWR Plan for Key Employees                                                                                                                                                                                                                                                                                                                                                                               
|            | 
|10.9*       |  | Form of Location Franchise Agreement dated as of January 1, 2003 between Pizza Hut, Inc. and NPC Management, Inc.                                                                                                                                                                                                                                                                                                                 
|            | 
|10.10*      |  | Form of Territory Franchise Agreement dated as of January 1, 2003 between Pizza Hut, Inc. and NPC Management, Inc.                                                                                                                                                                                                                                                                                                                
|            | 
|10.11*      |  | Purchase Agreement and Escrow Instructions dated as of August 26, 2006 between Realty Income Corporation and NPC International, Inc.                                                                                                                                                                                                                                                                                              
|            | 
|10.12*      |  | Purchase Agreement dated as of April 25, 2006 among Merrill Lynch & Co. and J.P. Morgan Securities Inc., as representative for the initial purchasers, NPC International,
Inc, and NPC Management, Inc.                                                                                                                                                                                                                           
|            | 
|10.13       |  | Pizza Hut National Purchasing Coop, Inc. Membership Subscription and Commitment Agreement (incorporated herein by reference to Exhibit 10.32 to the Registrants Annual Report
on Form 10-K filed with the Commission on May 28, 1999 (File No. 0-13007))                                                                                                                                                                         
|            | 
|10.14*      |  | ISDA Master Agreement dated as of June 6, 2006 between Merrill Lynch Capital Services, Inc. and NPC International, Inc.                                                                                                                                                                                                                                                                                                           
|            | 
|10.15       |  | NPC Acquisition Holdings, LLC Management Option Plan (including forms of executive and director option agreements) dated January 24, 2007 (incorporated herein by reference to
Exhibit 10.1 to the Companys Current Report on Form 8-K filed with the Commission on January 25, 2007)                                                                                                                                            
|            | 
|10.16       |  | Amendment to Franchise Agreement dated as of December 25, 2007 between Pizza Hut, Inc. and NPC International, Inc. (incorporated herein by reference as Exhibit 10.16 to the
Companys Annual Report on Form 10-K filed with the Commission on March 14, 2008)                                                                                                                                                                    
|            | 
|10.17       |  | Swap Transaction Confirmation dated March 31, 2008 between Merrill Lynch Capital Services, Inc. and NPC International, Inc. (incorporated herein by reference to Exhibit 10.17 to the
Companys Quarterly Report on Form 10-Q filed with the Commission on May 9, 2008)                                                                                                                                                           
|            | 
|10.18       |  | Amended and Restated Employment Agreement, dated as of December 29, 2008 among NPC International, Inc., NPC Acquisition Holdings, LLC and James K. Schwartz (incorporated herein by
reference as Exhibit 10.17 to the Companys Current Report on Form 8-K filed with the Commission on January 5, 2009)                                                                                                                          
|            | 
|10.19       |  | Amended and Restated Employment Agreement, dated as of December 29, 2008 among NPC International, Inc., NPC Acquisition Holdings, LLC and Troy D. Cook (incorporated herein by
reference as Exhibit 10.18 to the Companys Current Report on Form 8-K filed with the Commission on January 5, 2009)                                                                                                                               
|            | 
|10.20       |  | Amendment, dated as of March 10, 2009, to Amended and Restated Employment Agreement, dated as of December 29, 2008, among NPC International, Inc., NPC Acquisition Holdings, LLC and
James K. Schwartz (incorporated herein by reference as Exhibit 10.19 to the Companys Current Report on Form 8-K filed with the Commission on March 16, 2009)                                                                                



30







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##### Table of Contents

|            |  |                                                                                                                                                                                                                                                                                                                                              
|----------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Document Description                                                                                                                                                                                                                                                                                                                         
|            | 
|10.21       |  | Amendment, dated as of March 10, 2009, to Amended and Restated Employment Agreement, dated as of December 29, 2008, among NPC International, Inc., NPC Acquisition
Holdings, LLC and Troy D. Cook (incorporated herein by reference as Exhibit 10.20 to the Companys Current Report on Form 8-K filed with the Commission on March 16, 2009)
|            | 
|10.22***    |  | Restricted Common Unit Bonus Award Agreement dated May 5, 2010 between NPC Acquisition Holdings, LLC and James K. Schwartz                                                                                                                                                                                                                   
|            | 
|14.1        |  | Code of Business Conduct and Ethics (incorporated herein by reference to the Registrants Annual Report on Form 10-K filed with the Commission on March 23,
2007)                                                                                                                                                                            
|            | 
|21.1**      |  | List of subsidiaries                                                                                                                                                                                                                                                                                                                         
|            | 
|31.1***     |  | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                                           
|            | 
|31.2***     |  | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                                           
|            | 
|32.1***     |  | Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                            
|            | 
|32.2***     |  | Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                            





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

|** | Filed as an exhibit with the corresponding number to Amendment No. 1 to the registrants registration statement on Form S-4 (File No. 333-138338) and
incorporated herein by reference
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|*** | Filed herewith
|--- | --------------



31