Papa Johns 2014 Annual Report Download - page 49

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36
Solutions, decreased approximately $3.5 million. The decrease was primarily due to higher
infrastructure costs to support our digital ordering business and a lower margin at our print and
promotions business, primarily associated with an increased number of discounted direct mail
campaigns in comparison to 2013.
Unallocated Corporate Segment. Unallocated corporate expenses increased approximately $8.4
million. The components of unallocated corporate expenses were as follows (in thousands):
Year Ended Year Ended
December 28, December 29, Increase
2014 2013 (Decrease)
General and administrative (a) 38,647$ 34,819$ 3,828$
Net interest expense (b) 3,458 482 2,976
Depreciation expense 7,598 6,845 753
FOCUS system rollout costs (c) 1,638 - 1,638
Supplier marketing income (d) (1,000) (1,000) -
Other income (901) (121) (780)
Total unallocated corporate expenses 49,440$ 41,025$ 8,415$
(a) The increase in unallocated general and administrative costs was primarily due to higher legal
and management incentive compensation costs, partially offset by lower travel costs.
(b) The increase in net interest expense was primarily due to a higher average outstanding debt
balance with a higher effective interest rate. Additionally, 2013 included an approximate $1.1
million benefit from a decrease in the redemption value of a mandatorily redeemable
noncontrolling interest in a joint venture. An amendment in the joint venture agreement
during 2014 no longer requires changes in the value to be recorded in net interest.
(c) Includes depreciation expense for capitalized FOCUS software development costs and other
costs to support the rollout of the program.
(d) See Items Impacting Comparability; Non-GAAP Measures for additional information.
Diluted earnings per common share were $1.75 in 2014, compared to $1.55 in 2013, an increase of $0.20,
or 12.9%. Diluted earnings per common share increased $0.10 due to the 5.7% reduction in weighted
average shares outstanding.
Review of Consolidated Operating Results
Revenues. Domestic Company-owned restaurant sales were $701.9 million for 2014 compared to $635.3
million for 2013. As previously noted, the 10.5% increase was primarily due to an 8.2% increase in
comparable sales and a 2.6% increase in equivalent units.
North America franchise sales increased 7.1% to $2.04 billion, from $1.91 billion in 2013, as domestic
franchise comparable sales increased 6.2% and equivalent units increased 1.2%. North America franchise
sales are not included in our consolidated statements of income; however, our North America franchise
royalty revenue is derived from these sales. North America franchise royalties were $89.4 million for
2014, representing an increase of 9.5% from 2013. As previously noted, this increase is due to the
franchise comparable sales increase and a reduction in performance-based royalty incentives.
Average weekly sales for comparable units include restaurants that were open throughout the periods
presented below. The comparable sales base for domestic Company-owned and North America franchised
restaurants, respectively, includes restaurants acquired by the Company or divested to franchisees during
the previous twelve months. Average weekly sales for non-comparable units include restaurants that were