The units sold by PHI include 10 fee-owned locations, which NPC will lease from PHI. The units sold by NPC include one fee-owned location that will be leased to PHI.
The units sold pursuant to the PSA are expected to result in a material noncash loss for NPC because of the anticipated write-down of intangible assets including franchise rights and goodwill relating to the sold stores. NPC currently estimates that the amount of the pre-tax charge will range from $15 million to $19 million. The final charge will be determined following the completion of certain asset valuations, and the amount is subject to change based upon completion of the process. The final charge will be determined and recorded in the fourth quarter of fiscal 2008. All changes to our initial estimates will be determined following the completion of certain asset valuations during the first quarter of fiscal 2009, and the amount is subject to change based upon completion of this process.
The acquisition by NPC will be funded entirely with proceeds received from the sale of Pizza Hut units to PHI.
NPC International Inc. is the world’s largest Pizza Hut franchisee and operates 1,111 Pizza Hut restaurants, 18 percent of the entire domestic Pizza Hut system and delivery/carryout units in 28 states.