Papa Johns 2009 Annual Report Download - page 103

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96
20. Segment Information (continued)
(4)
Domestic franchising operating income increased approximately $100,000 in 2009 as compared to
2008 primarily as a result of the 0.25% increase in our royalty rate in the last 4 months of 2009 (the
royalty rate for the majority of domestic franchisees increased to 4.50% in the last four months of
2009 as compared to 4.25% in 2008). The increase in royalties was partially offset by lower franchise
and development fees due to fewer unit openings and additional development incentive programs
offered by the Company in 2009. In addition, during 2008 we collected approximately $500,000 in
franchise renewal fees associated with the domestic franchise renewal program. The operating results
for the domestic franchising segment increased $2.1 million in 2008 as compared to 2007 primarily
as a result of the 0.25% increase in our royalty rate implemented at the beginning of 2008 (the
royalty rate for the majority of domestic franchisees was 4.25% in 2008 as compared to 4.0% in
2007). In addition, equivalent franchise units increased 1.8% and comparable sales increased 0.6% in
2008.
(5)
The international segment reported operating losses of $3.1 million in 2009, $7.2 million in 2008 and
$8.7 million in 2007. The year-over-year improvements in operating results reflect leverage on the
international organizational structure from increased revenues due to the growth in the number of
units and unit volumes. The rate of year-over-year improvement declined in the last half of 2009 due
to slowing sales and unit growth in response to general worldwide economic conditions. In addition,
the 2008 results include a goodwill impairment charge of $2.3 million associated with our United
Kingdom operations.
(6)
Represents BIBP’s operating income (loss), net of minority interest income, for each year.
(7)
The “All Others” operating segment reported a decline in operating results of $6.5 million in 2009 as
compared to 2008. The decrease was primarily due to a $3.9 million decline in our online ordering
system business based on an agreement with our franchisees and a $1.3 million decrease in the
operating results of our print and promotions subsidiary due to lower commercial sales. The 2008
operating results were $2.8 million favorable to the 2007 results primarily due to our print and
promotions subsidiary and favorable claims settlements associated with our captive insurance
subsidiary.
(8)
Unallocated corporate expenses increased approximately $13.6 million in 2009 as compared to 2008
and increased approximately $4.7 million in 2008 as compared to 2007. The 2009 increase, as
compared to 2008, is primarily due to a $5.7 million increase in franchise support initiatives and an
increase in general and administrative costs of $10.5 million, partially offset by a $2.9 million
decrease in provisions for uncollectible accounts and notes receivable. The 2008 increase, as
compared to 2007, is primarily due to a $3.5 million increase in contributions to the national
marketing fund and other local co-ops and a $3.9 million increase in the provisions for uncollectible
accounts and notes receivable, offset by a $1.1 million decrease in general and administrative costs.