Papa Johns 2009 Annual Report Download - page 54

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47
Our income before income taxes, net of noncontrolling interests, totaled $56.8 million in 2008, as
compared to $46.0 million in 2007 as summarized in the following table on an operating segment basis
(in thousands):
Increase
2008 2007 (Decrease)
Domestic Company-owned restaurants 19,997$ 25,407$ (5,410)$
Domestic commissaries 30,235 35,847 (5,612)
Domestic franchising 53,610 51,466 2,144
International (7,193) (8,734) 1,541
All others 9,175 6,348 2,827
Unallocated corporate expenses (36,154) (31,454) (4,700)
Elimination of intersegment profits (332) (118) (214)
Income before income taxes, excluding variable interest entities 69,338 78,762 (9,424)
Variable interest entities (10,540) (31,709) 21,169
Total income before income taxes 58,798 47,053 11,745
Income attributable to noncontrolling interests (2,022) (1,025) (997)
Total income before income taxes, net of noncontrolling interests
56,776
$
46,028
$
10,748
$
Excluding the impact of the consolidation of BIBP (pre-tax losses of $10.5 million or $0.24 per diluted
share in 2008 and $31.7 million or $0.68 per diluted share in 2007), 2008 income before income taxes,
net of noncontrolling interests, was $67.3 million (5.9% of total revenues), compared to $77.7 million
(7.3% of total revenues) in 2007. The $10.4 million decrease in income before income taxes (excluding
the consolidation of BIBP) was principally due to the following:
•
Domestic Company-owned Restaurant Segment. Domestic Company-owned restaurants’
operating income decreased $5.4 million over the prior year, comprised of the following (in
thousands):
December 28, December 30, Increase
2008 2007 (Decrease)
Operating income, excluding
impairment and disposition losses 26,515$ 26,620$ (105)$
Impairment and disposition losses (6,518) (1,807) (4,711)
Gain on lease termination - 594 (594)
Total segment operating income
19,997
$
25,407
$
(5,410)
$
Year Ended
Domestic Company-owned restaurants’ income from operations, excluding impairment and
disposition losses, was comparable to the 2007 results as the significant increase in commodities
costs during 2008 was offset by the fixed cost leverage associated with the 1.7% increase in
comparable sales for the year and the benefit from units acquired in the third quarter of 2007.
Restaurant operating margin on an external basis, excluding the impact of the consolidation of
BIBP, was 18.9% which was approximately 1.0% below the 2007 margin primarily due to
increased commodities costs.