Papa Johns 2005 Annual Report Download - page 46

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44
The following table presents the actual average block price for cheese and the BIBP block price by
quarter in 2005, 2004 and 2003:
2005 2004 2003 2005 2004 2003
Quarter 1 1.539$ 1.426$ 1.115$ 1.520$ 1.220$ 1.159$
Quarter 2 1.515 2.012 1.134 1.550 1.326 1.122
Quarter 3 1.485 1.528 1.536 1.677 1.556 1.242
Quarter 4 1.442 1.617 1.474 1.625 1.535 1.217
Full Year 1.495$ 1.646$ 1.315$ 1.593$ 1.409$ 1.185$
BIBP Block PriceActual Block Price
The following table presents the block price for cheese and the BIBP block price by quarter as projected
through 2006 (based on the February 21, 2006 Chicago Mercantile Exchange (CME) milk futures market
prices):
Projected BIBP
2006 2006
Quarter 1 * 1.320$ 1.548$
Quarter 2 * 1.250 1.482
Quarter 3 * 1.310 * 1.523
Quarter 4 * 1.320 * 1.421
Full Year * 1.300$ * 1.494$
*Amounts are estimates based on futures prices.
Block Price
The following table presents the 2004 and 2005 impact by quarter on our pre-tax income due to
consolidating BIBP. Additionally, based on the CME milk futures market prices as of February 21, 2006,
and the actual first and second quarter 2006 and projected third and fourth quarter 2006 cheese costs to
restaurants as determined by the BIBP pricing formula, the consolidation of BIBP is projected to increase
(decrease) our pre-tax income as follows in 2006 (in thousands):
Projected Actual Actual
2006 2005 2004
Quarter 1 * 6,119$ (1,595)$ (1,645)$
Quarter 2 * 5,962 (185) (18,342)
Quarter 3 * 4,922 3,044 (506)
Quarter 4 * 2,644 3,208 (2,966)
Full Year
*
19,647
$
4,472
$
(23,459)
$
*The projections above are based upon current futures market prices. Historically, actual results have
been subject to large fluctuations and have differed significantly from previous projections using the
futures market prices.
Over the long term, we expect to purchase cheese at a price approximating the actual average market
price and therefore we do not generally make use of financial instruments to hedge commodity prices.