Papa Johns 2011 Annual Report Download - page 41

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36
• Unallocated Corporate Segment. Unallocated corporate expenses decreased $5.0 million in
2011, as compared to prior year. The components of unallocated corporate expenses were as
follows (in thousands):
Year Ended Year Ended
December 25, December 26, Increase
2011 2010 (Decrease)
General and administrative (a) 24,807$ 25,823$ (1,016)$
Net interest (b) 816 4,120 (3,304)
Depreciation 8,021 8,873 (852)
Franchise incentives and initiatives (c) 3,234 6,489 (3,255)
Perfect Pizza lease obligation (d) 832 - 832
Other expense (income) (e) 533 (2,039) 2,572
Total unallocated corporate expenses 38,243$ 43,266$ (5,023)$
(a) The decrease in unallocated corporate general and administrative costs for 2011 was due to
lower short- and long-term incentive compensation costs, and lower sponsorship fees,
partially offset by increased travel costs.
(b) The decrease in net interest expense reflects the decrease in our average outstanding debt
balance and lower interest rates.
(c) In 2010, we provided discretionary contributions to the Marketing Fund and other local
advertising cooperatives. In 2011, we offered incentives to domestic franchisees for meeting
certain sales targets, including driving comparable sales, transactions and online sales.
(d) The Perfect Pizza lease obligation relates to rents, taxes and insurance associated with the
former Perfect Pizza operations in the United Kingdom. See the notes to the consolidated
financial statements for additional information.
(e) The increase in other expense (income) is primarily due to increases in our online customer
loyalty program costs and disposition and valuation-related costs.
• Variable Interest Entities. BIBP generated income before income taxes of $21.0 million in
2010, which primarily consisted of the BIBP Settlement and income associated with cheese sold
to domestic Company-owned and franchise restaurants of $1.7 million and $5.6 million,
respectively. BIBP reported breakeven results for the first two months of 2011, at which time we
terminated the purchasing arrangement with BIBP.