Papa Johns 2014 Annual Report Download - page 54

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41
Discussion of Operating Results
Our income before income taxes totaled $106.1 million in 2013, as compared to $98.4 million in 2012, an
increase of approximately $7.7 million. Income before income taxes is summarized in the following table
on a reporting segment basis. Alongside the GAAP financial statement data, we have included certain
additional “non-GAAP’ measures that the Company believes are important for purposes of comparing to
prior year results and analyzing each segment’s operating results.
Incentive Adjusted
Dec. 29, Dec. 30, Increase/ 53rd Contribution Increase/
(In thousands) 2013 2012 (Decrease) Week (a) (b) (Decrease) (c)
52 weeks 53 weeks
Domestic Company-owned restaurants 34,590$ 38,114$ (3,524)$ 1,609$ 1,029$ (886)$
Domestic commissaries 37,804 34,317 3,487 1,200 - 4,687
North America franchising 70,201 69,332 869 1,414 - 2,283
International 2,803 3,063 (260) 414 - 154
All others 3,490 2,889 601 215 - 816
Unallocated corporate expenses (41,025) (48,958) 7,933 (707) (5,000) 2,226
Elimination of intersegment profits (1,754) (362) (1,392) - - (1,392)
Total income before income taxes 106,109$ 98,395$ 7,714$ 4,145$ (3,971)$ 7,888$
Year Ended
(a) The 53rd week of operations increased income before income taxes by approximately $4.1 million
in 2012. The “Adjusted Increase/ (Decrease)” column eliminates the impact of the 53rd week so
that the 52 weeks of 2013 can be compared to an equivalent 52 weeks in 2012.
(b) Includes the $5.0 million of expense related to the 2012 Incentive Contribution to PJMF and the
related benefit of a $1.0 million advertising credit from PJMF that was received by the Domestic
Company-owned restaurants. The annual amortization of the $5.0 million ($1.0 million per year)
is the same in both years presented. The “Adjusted Increase/ (Decrease)” column eliminates the
impact of the Incentive Contribution for comparability.
(c) See “Items Impacting Comparability; Non-GAAP Measures” previously discussed for further
information. The impact of the 53rd week in 2012 substantially offset the impact of the Incentive
Contribution.
Changes in income before income taxes for 2013 in comparison to 2012 are summarized on a segment
basis as follows:
Domestic Company-owned Restaurant Segment. Domestic Company-owned restaurants’
income before income taxes decreased $3.5 million. Excluding the 2012 impact of the 53rd week
and the Incentive Contribution of approximately $2.6 million, income decreased $900,000 due to
higher commodity costs of approximately $5.8 million, largely offset by incremental profits
associated with higher comparable sales of 6.6%. Additionally, 2012 benefited from various
supplier incentives of approximately $1.0 million.
Domestic Commissaries Segment. Domestic commissaries’ income before income taxes
increased $3.5 million. Excluding the impact of the 53rd week in 2012 of approximately $1.2
million, income increased $4.7 million. The increase was primarily due to higher commissary
product volumes, resulting from increased restaurant sales volumes from the previously noted
increase in net units and comparable sales, and higher margins. The incremental profits from
higher sales were somewhat offset by higher costs of approximately $1.4 million related to
bringing distribution in house at certain of our commissaries from a third party provider. In
addition, we had one-time dough production start up costs at our New Jersey commissary of
approximately $700,000 in 2013.