Papa Johns 2007 Annual Report Download - page 99

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92
22. Segment Information (continued)
(in thousands) 2007 2006 2005
Property and equipment:
Domestic Company-owned restaurants 162,828$ 149,548$ 129,574$
Domestic commissaries 76,898 74,526 72,838
International 7,418 6,272 3,860
Variable interest entities 1,714 1,386 2,164
All others 23,753 20,881 13,907
Unallocated corporate assets 135,463 133,784 123,163
Accumulated depreciation and amortization (209,117) (188,675) (167,059)
Net property and equipment 198,957$ 197,722$ 178,447$
Expenditures for property and equipment:
Domestic restaurants 18,399$ 21,034$ 6,276$
Domestic commissaries 2,509 1,721 783
International 1,656 312 2,277
All others 1,280 6,705 2,196
Unallocated corporate 7,304 9,580 6,014
Total expenditures for property and equipment 31,148$ 39,352$ 17,546$
(1) The revenues from external customers for variable interest entities are attributable to the franchise
entities to which we have extended loans that qualify as consolidated VIEs. The intersegment
revenues for variable interest entities of $138.2 million, $144.1 million in 2006 and $151.9 million in
2005 are attributable to BIBP.
(2) The operating results for domestic Company-owned restaurants decreased approximately $7.8
million in 2007 and improved $7.9 million in 2006, which included $1.6 million related to the 53rd
week of operations in 2006. The 2007 decline in operating income, as compared to 2006, is
primarily due to an increase in wages (including the impact of a federal minimum wage increase in
July 2007 and certain other minimum wage increases in various states), increased commodity costs
and other operating costs. In addition, the 2007 results include a charge of $1.5 million associated
with the closure or impairment of certain restaurants and a $594,000 pre-tax gain associated with the
termination of a lease agreement in 2007. The 2006 improvement, as compared to 2005, is primarily
due to fixed-cost leverage and related margin improvement associated with a 3.6% increase in
comparable sales and lower commodity costs (primarily cheese). Additionally, the Company-owned
operating results for 2005 included a gain of $2.2 million from the sale of 92 restaurants from three
transactions.
(3) Domestic commissaries’ operating income increased approximately $1.2 million in 2007 and $9.2
million in 2006 as compared to 2005. The 2007 increase of $1.2 million (the increase in 2007 was
$2.4 million, excluding the $1.2 million impact of the 53rd week on 2006 operating results) is
principally due to increased volumes of higher margin fresh dough products and improved margin
from other commodities, partially offset by a $600,000 contribution to the Papa John’s Marketing
Fund. Approximately $4.3 million of the increase in 2006, as compared to 2005, is due to the 53rd
week included in 2006, income from sales to the Six Flags, Inc. theme-park operator and the closing
of the Jackson, Mississippi facility in 2005. The remainder of the increase was principally due to
additional margin on increased sales volumes.