Papa Johns 2014 Annual Report Download - page 58

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45
International restaurant and commissary expenses were 84.9% in 2013 compared to 84.6% in 2012, as a
percentage of total restaurant and commissary sales. The increase of 0.3% is primarily attributable to the
higher operating expenses associated with our China Company-owned restaurant operations. As
previously noted, our China Company-owned restaurant operations represented approximately 28% of
international revenues in 2013 and 22% in 2012, an increase of 6%, and our PJUK operations represented
48% of international revenues in 2013, a decrease of 3%.
General and administrative expenses were $134.2 million, or 9.3% of revenues for 2013, as compared to
$131.6 million, or 9.8% of revenues for 2012. The decrease as a percentage of sales was primarily the
result of leverage from higher sales. Additionally, 2012 included approximately $3.3 million related to the
previously discussed Agne text messaging class action, which increased the 2012 general and
administrative expenses percentage by approximately 0.2%.
Other general expenses reflected net expense of $6.7 million in 2013, as compared to $8.3 million in 2012
as detailed below (in thousands):
Increase
2013 2012 (Decrease)
Supplier marketing payment (a) (1,000)$ 4,000$ (5,000)$
Franchise and development incentives and initiatives (b) 4,645 3,194 1,451
Disposition and impairment losses (c) 804 362 442
Pre-opening restaurant costs 458 321 137
Perfect Pizza lease obligation (d) 305 (135) 440
Other expense (e) 1,461 571 890
Total other general expenses 6,673$ 8,313$ (1,640)$
(a) See “Items Impacting Comparability; Non-GAAP Measures” above for further information
about the Incentive Contribution.
(b) Includes incentives provided to domestic franchisees for opening restaurants.
(c) Disposition and impairment losses include costs associated with the disposition of certain
systems and other equipment, which were higher in 2013.
(d) The Perfect Pizza lease obligation relates to rents, taxes and insurance associated with the
former Perfect Pizza operations in the United Kingdom.
(e) The increase is primarily due to higher expenses associated with our online customer loyalty
program.
Depreciation and amortization was $35.1 million, or 2.4% of revenues for 2013, as compared to $32.8
million, or 2.4% of revenues, for 2012. The increase of $2.3 million is primarily due to higher
depreciation for our domestic commissaries, primarily attributable to incremental depreciation related to
the New Jersey dough production capital expenditures, and higher international depreciation costs
primarily associated with the additional number of China Company-owned restaurants.