Papa Johns 2008 Annual Report Download - page 102

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95
21. Segment Information (continued)
(4) Domestic franchising operating income increased $2.1 million in 2008 as compared to 2007
primarily as a result of the 0.25% increase in our royalty rate implemented at the beginning of 2008
(the royalty rate for the majority of domestic franchisees was 4.25% in 2008 as compared to 4.0% in
2007). In addition, equivalent franchise units increased 1.8% and comparable sales increased 0.6%
in 2008. The operating results for the domestic franchising segment were relatively flat in 2007
compared to 2006, as an increase in our field organizational support staff in 2007 to improve the
support of our domestic franchise operations and the inclusion of $1.0 million of additional royalty
revenue in 2006 related to the 53rd week of operations, was substantially offset by the collection of
fees of $2.0 million in the fourth quarter of 2007 associated with our franchise renewal program.
(5) The international segment reported an operating loss of $7.2 million in 2008 as compared to $8.7
million in 2007. The improvement of $1.5 million in operating results in 2008 reflects leverage on
the international organizational structure from increased revenues due to the growth in the number of
units and unit volumes, offset by a goodwill impairment charge of $2.3 million associated with our
United Kingdom operations.
(6) Represents BIBP’s operating income (loss), net of minority interest income for each year.
(7) Unallocated corporate expenses increased approximately $4.7 million in 2008 as compared to 2007
and decreased approximately $6.1 million in 2007 as compared to 2006. The 2008 increase, as
compared to 2007, is primarily due to a $3.5 million increase in contributions to the national
marketing fund and other local co-ops and a $3.9 million increase in the provisions for uncollectible
accounts and notes receivable, offset by a $1.1 million decrease in general and administrative costs.
The 2007 decrease, as compared to 2006, is primarily due to lower general and administrative costs,
including management incentives, workers’ compensation, non-owned automobile and health
insurance programs, offset by an increase in interest expense.