Papa Johns 2006 Annual Report Download - page 45

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42
Review of Operating Results
Revenues. Domestic Company-owned restaurant sales increased 5.3% to $434.5 million in 2005, from
$412.7 million for the comparable period in 2004. The 5.3% increase was primarily due to a comparable
sales increase of 7.4% in 2005, partially offset by a decrease in equivalent company-owned units due to
the sale of 84 restaurants at the beginning of the fourth quarter of 2005.
Variable interest entities restaurant sales include restaurant sales for franchise entities to which we have
extended loans that qualify as VIEs. We began consolidating the operating results of these entities in the
second quarter of 2004. Beginning in the second quarter of 2005, one of the franchise entities, with 19
restaurants and annual revenues approximating $12.0 million, sold its restaurants to a third party.
Accordingly, beginning in the second quarter of 2005, we were no longer required to consolidate the
operating results of these 19 restaurants.
Domestic franchise sales increased 6.2% to $1.38 billion in 2005 from $1.30 billion for the comparable
period in 2004 primarily resulting from a 4.3% increase in comparable sales, and an increase in
equivalent units during 2005. Domestic franchise royalties increased 4.0% to $52.3 million from $50.3
million for the comparable period in 2004 primarily due to an increase in franchise sales, partially offset
by an increase in royalty waivers granted to certain franchisees.
The comparable sales base and average weekly sales for 2005 and 2004 for domestic Company-owned
and domestic franchised restaurants consisted of the following:
Company-owned Franchised Company-owned Franchised
Total domestic units (end of period) 502 2,097 568 1,997
Equivalent units 550 2,008 563 1,984
Comparable sales base units 540 1,885 549 1,892
Comparable sales base percentage 98.2% 93.9% 97.5% 95.4%
Average weekly sales - comparable units $15,283 $13,451 $14,172 $12,733
Average weekly sales - other units $10,805 $10,080 $10,880 $10,378
Average weekly sales - all units $15,199 $13,245 $14,089 $12,623
December 25, 2005 December 26, 2004
Year Ended Year Ended
Domestic franchise and development fees increased to $3.0 million for 2005, including approximately
$850,000 recognized upon development cancellation or franchise renewal and transfer payments, from
$2.5 million for the same period in 2004, including approximately $590,000 recognized upon
development cancellation or franchise renewal and transfer payments. There were 101 domestic
franchised unit openings in 2005 compared to 97 in 2004.
Domestic commissary sales increased $21.8 million, or 5.8%, to $398.4 million for 2005, from $376.6
million for the comparable period in 2004, primarily due to the impact of an increase in commodity
prices, primarily cheese, on commissary sales. Other sales decreased to $50.5 million for 2005, from
$53.1 million for the comparable period in 2004, primarily as a result of a decrease in revenues
associated with insurance-related services provided to franchisees.
International revenues consist primarily of the PJUK continuing operations, denominated in British
Pounds Sterling and converted to U.S. dollars (approximately 74% of total 2005 international revenues).