Papa Johns 2012 Annual Report Download - page 44

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38
Other general expenses reflected net expense of $8.3 million in 2012, as compared to $9.8 million in 2011
as detailed below (in thousands):
Increase
2012 2011 (Decrease)
Supplier marketing payment (a) 4,000$ -$ 4,000$
Franchise and development incentives and initiatives (b) 3,194 4,921 (1,727)
Provision for uncollectible accounts and notes receivable 826 379 447
Disposition and impairment losses (c) 362 1,745 (1,383)
Pre-opening restaurant costs 321 273 48
Perfect Pizza lease obligation (d) (135) 832 (967)
Other (income) expense (e) (255) 1,617 (1,872)
Total other general expenses 8,313$ 9,767$ (1,454)$
(a) See “Items Impacting Comparability; Non-GAAP Measures” above for further information about the
Incentive Contribution.
(b) Includes incentives provided to domestic franchisees for opening restaurants. The 2011 amount
includes approximately $3.2 million in incentives offered to domestic franchisees for meeting certain
sales targets, including driving comparable sales, transactions and online sales, which were not
offered in 2012.
(c) Disposition and impairment losses include costs associated with the disposition of certain systems
and other equipment, which were higher in 2011.
(d) The Perfect Pizza lease obligation relates to rents, taxes and insurance associated with the former
Perfect Pizza operations in the United Kingdom.
(e) The decrease is primarily a result of 2011 including higher costs related to our online customer
loyalty program.
Depreciation and amortization was $32.8 million, or 2.4% of revenues for 2012, as compared to $32.7
million, or 2.7% of revenues, for 2011.
Net interest. Net interest expense was approximately $1.4 million in 2012, compared to $2.2 million in
2011. The decrease in net interest costs reflects a lower effective interest rate and a reduction in interest
expense associated with a change in redemption value of noncontrolling interest in a joint venture whose
noncontrolling interest is deemed mandatorily redeemable. See “Notes 2, 3, 4 and 22” of the “Notes to
Consolidated Financial Statements” for additional information.
Income Tax Expense. Our effective income tax rate was 32.9% in 2012 compared to 31.0% in 2011. Our
effective income tax rate may fluctuate for various reasons, including the settlement or resolution of
specific federal and state issues. We recognized reductions of $738,000 and $1.9 million in our income
tax expense associated with the finalization of certain income tax issues in 2012 and 2011, respectively.
2011 Compared to 2010
Discussion of Revenues
Consolidated revenues increased 8.1% to $1.22 billion in 2011 compared to $1.13 billion in 2010,
primarily consisting of the following:
Domestic Company-owned restaurant sales increased $22.6 million, or 4.5%, in 2011 primarily
due to an increase in comparable sales of 4.1%.