Papa Johns 2010 Annual Report Download - page 97

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90
19. Segment Information (continued)
(in thousands)
2010
2009
2008
Property and equipment:
Domestic Company-owned restaurants
165,434
$
158,884
$
156,171
$
Domestic commissaries
82,162
80,180
78,808
International
17,574
16,587
10,706
All others
33,786
25,526
22,167
Unallocated corporate assets
127,184
120,885
114,913
Accumulated depreciation and amortization
(239,546)
(214,091)
(197,087)
Net property and equipment
186,594
$
187,971
$
185,678
$
Expenditures for property and equipment:
Domestic restaurants
9,124
$
8,300
$
14,669
$
Domestic commissaries
2,795
6,029
2,284
International
4,835
7,277
3,490
All others
8,151
313
701
Unallocated corporate
6,220
11,619
8,127
Total expenditures for property and equipment
31,125
$
33,538
$
29,271
$
(1)
The intersegment revenues for variable interest entities of $153.0 million in 2010, $142.4 million in
2009 and $165.4 million in 2008 are attributable to BIBP.
(2)
The operating results for domestic Company-owned restaurants decreased approximately $3.3
million in 2010, as compared to 2009. The 2010 decrease was primarily due to a decline in operating
margin from lower average ticket prices, partially offset by increased customer traffic and reductions
in labor costs. In addition, 2009 included restaurant closure costs of approximately $700,000. There
were no significant closure costs in 2010. The increase in the operating results in 2009, as compared
to 2008, was principally due to lower commodities and utilities costs and the sale of 62 restaurants in
late 2008 that were collectively unprofitable. Additionally, the 2008 results included a $6.5 million
charge associated with the divestiture and impairment of certain restaurants.
(3)
Domestic commissaries’ operating income decreased approximately $15.2 million in 2010 and
$800,000 in 2009 compared to the prior comparable periods. The decrease in 2010 was primarily due
to an increase in cost of sales of $14.2 million associated with PJFS’s agreement to pay to BIBP for
past cheese purchases an amount equal to its accumulated deficit at December 26, 2010. The
remaining decrease was primarily due to increased fuel costs, partially offset by an increase in sales
volumes, although at a lower gross margin percentage. The 2010 gross margin percentage included
the impact of commodities cost increases we absorbed for certain vegetable products resulting from
harsh Florida winter weather and various rebate programs available to restaurants for achieving
certain sales improvement targets. In 2009 we recorded approximately $800,000 of management
transition costs and $400,000 of costs associated with the closure of one of our commissaries. The
$800,000 decrease from 2008 to 2009 was primarily due to $800,000 of management transition costs
and $400,000 of costs associated with the closing of one of our commissaries. The decline in our
operating margin from our reductions in pricing was offset by a decline in fuel costs for 2009.