915862--11/26/2007--PANTRY

related topics

{cost, regulation, environmental}

{debt, indebtedness, cash}

{financial, litigation, operation}

{stock, price, share}

{condition, economic, financial}

{customer, product, revenue}

{competitive, industry, competition}

{personnel, key, retain}

{acquisition, growth, future}

{control, financial, internal}

{provision, law, control}

Risks Related to Our Industry The convenience store industry is highly competitive and impacted by new entrants. Increased competition could result in lower margins. Volatility of wholesale petroleum costs could impact our operating results. Wholesale cost increases of, and tax increases on, tobacco products could adversely impact our operating results. Changes in consumer behavior, travel and tourism could impact our business. Risks Related to Our Business Unfavorable weather conditions or other trends or developments in the southeastern United States could adversely affect our business. Inability to identify, acquire and integrate new stores could adversely affect our ability to grow our business. Our indebtedness could negatively impact our financial health. Despite current indebtedness levels, we and our subsidiaries may still be able to incur additional debt. This could further increase the risks associated with our substantial leverage. To service our indebtedness, we will require a significant amount of cash. Our ability to generate cash depends on many factors beyond our control. If we do not comply with the covenants in the credit agreement governing our senior credit facility and the indenture governing our senior subordinated notes or otherwise default under them or the indenture governing our convertible notes, we may not have the funds necessary to pay all of our indebtedness that could become due. We are subject to state and federal environmental and other regulations. Failure to comply with these state and federal environmental and other regulations may result in penalties or costs that could have a material adverse effect on our business. Failure to comply with state laws regulating the sale of alcohol and tobacco products may result in the loss of necessary licenses and the imposition of fines and penalties on us, which could have a material adverse effect on our business. Failure to comply with the other state and federal regulations we are subject to may result in penalties or costs that could have a material adverse effect on our business. We depend on one principal supplier for the majority of our merchandise. A disruption in supply or a change in our relationship could have a material adverse effect on our business. We depend on two principal suppliers for the majority of our gasoline. A disruption in supply or a change in our relationship could have a material adverse effect on our business. Because we depend on our senior management s experience and knowledge of our industry, we would be adversely affected if we were to lose any members of our senior management team. Pending litigation could adversely affect our financial condition and results of operations. Litigation and publicity concerning food quality, health and other related issues could result in significant liabilities or litigation costs and cause consumers to avoid our convenience stores. Pending SEC matters could adversely affect us. If we fail to maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results. As a result, current and potential stockholders could lose confidence in our financial reporting, which would harm our business and the trading price of our stock. Future sales of additional shares into the market may depress the market price of our common stock. Any issuance of shares of our common stock in the future could have a dilutive effect on your investment. The market price for our common stock has been and may in the future be volatile, which could cause the value of your investment to decline. Provisions in our certificate of incorporation, our bylaws and Delaware law may have the effect of preventing or hindering a change in control and adversely affecting the market price of our common stock.

Full 10-K form ▸

915862--11/26/2007--PANTRY_INC