Papa Johns 2009 Annual Report Download - page 34

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27
(1)
We operate on a 52-53 week fiscal year ending on the last Sunday of December of each year. The
2009, 2008, 2007 and 2005 fiscal years consisted of 52 weeks, and the 2006 fiscal year consisted of
53 weeks. The additional week resulted in additional revenues of approximately $20.0 million and
additional pre-tax income of approximately $3.5 million, or $0.07 per diluted share for 2006.
(2)
Domestic Franchise royalties were derived from franchised restaurant sales of $1.55 billion in 2009,
$1.50 billion in 2008, $1.46 billion in 2007, $1.51 billion in 2006 and $1.38 billion in 2005.
(3)
International Royalties were derived from franchised restaurant sales of $251.8 million in 2009,
$221.0 million in 2008, $176.2 million in 2007, $139.3 million in 2006 and $104.2 million in 2005.
(4)
Restaurant sales for International Company-owned restaurants were $10.3 million in 2009, $8.1
million in 2008, $4.0 million in 2007, $1.7 million in 2006 and $642,000 in 2005.
(5)
The operating results include the consolidation of BIBP, which increased operating income
approximately $23.3 million in 2009, $19.7 million in 2006 and $5.8 million in 2005 and reduced
operating income by $8.6 million in 2008 and $31.0 million in 2007. The 2006 operating results
include the benefit of the 53
rd
week, which increased operating income approximately $3.5 million.
Operating income includes domestic and international restaurant closure, impairment and
disposition losses of $657,000 in 2009, $8.8 million in 2008 and $1.8 million in 2007, and gains of
$260,000 in 2006 and $989,000 in 2005. See “Notes 3 and 6” of “Notes to Consolidated Financial
Statements.”
(6)
Represents the noncontrolling interests’ ownership in two joint venture arrangements. Prior years’
results have been reclassified to conform to the current year presentation.
(7)
The Perfect Pizza operations, which were sold in March 2006, are classified as “discontinued
operations.”
(8)
Prior years have been reclassified to conform to the current year presentation.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Introduction
Papa John’s International, Inc. (referred to as the “Company,” “Papa John’s” or in the first person
notations of “we,” “us” and “our”) began operations in 1985 with the opening of the first Papa John’s
restaurant in Jeffersonville, Indiana. At December 27, 2009, there were 3,469 Papa John’s restaurants in
operation, consisting of 614 Company-owned and 2,855 franchised restaurants. Our revenues are
principally derived from retail sales of pizza and other food and beverage products to the general public
by Company-owned restaurants, franchise royalties, sales of franchise and development rights, sales to
franchisees of food and paper products, printing and promotional items, risk management services, and
information systems and related services used in their operations.
New unit openings in 2009 were 216 as compared to 267 in 2008 and 263 in 2007 and unit closings in
2009 were 127 as compared to 95 in 2008 and 70 in 2007. We expect net unit growth of approximately
140 to 180 units during 2010.
We have continued to produce strong average sales from our domestic Company-owned restaurants even
in a very competitive market environment. Our expansion strategy is to cluster restaurants in targeted
markets, thereby increasing consumer awareness and enabling us to take advantage of operational,
distribution and advertising efficiencies. Average annual Company-owned sales for our most recent
comparable restaurant base were $869,000 for 2009, compared to $867,000 for 2008 and $836,000 for
2007. Average sales volumes in new markets are generally lower than in those markets in which we have
established a significant market position. The comparable sales for domestic Company-owned restaurants
decreased 0.5% in 2009, increased 1.7% in 2008 and increased 0.5% in 2007. The comparable sales for
domestic franchised units increased 0.1% in 2009, 0.6% in 2008 and 0.3% in 2007.