Papa Johns 2009 Annual Report Download - page 47

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40
Preferred Marketing Solutions, and due to the 2008 period including more favorable adjustments
in claims loss reserves associated with our inactive captive insurance program. The decline in the
online ordering system business reflected a reduction in the online fee percentage as we began to
operate the online business at a break-even level beginning in 2009. The decline in profitability
in our print and promotions business was due to lower sales in 2009, as compared to 2008,
reflecting the challenging U.S. economic environment.
•
Unallocated Corporate Segment. Unallocated corporate expenses increased $13.6 million as
compared to 2008. The components of the unallocated corporate segment were as follows (in
thousands):
Year Ended
December 27,
2009
Year Ended
December 28,
2008
Increase
(Decrease)
General and administrative (a) 26,893$ 16,372$ 10,521$
Net interest 4,251 4,961 (710)
Depreciation 8,684 7,770 914
Franchise support initiatives (b) 9,556 3,900 5,656
Provisions for uncollectible accounts
and notes receivable (c) 1,172 4,082 (2,910)
Other income (801) (931) 130
Total unallocated corporate expenses
49,755
$
36,154
$
13,601
$
(a)
The increase in unallocated general and administrative costs for the year ended December
27, 2009, was primarily due to the following factors (in thousands):
Year Ended
December 27,
2009
Year Ended
December 28,
2008
Increase
(Decrease)
Severance and other management
transition costs (1) 1,607$ 125$ 1,482$
Short- and long-term incentive
compensation (2) 13,145 6,174 6,971
Litigation settlement 1,065 - 1,065
Sponsorship fees (3) 3,907 3,334 573
Other, net 7,169 6,739 430
Total unallocated general and
administrative expenses
26,893
$
16,372
$
10,521
$
(1)
In addition to routine management transition costs, the Company implemented a
reduction-in-force during the third quarter of 2009 in which 35 positions were
eliminated, mostly in corporate support areas. Severance and related costs associated
with the reduction-in-force were approximately $900,000, and this action is expected
to reduce future general and administrative costs by approximately $2.6 million
annually.