Papa Johns 2014 Annual Report Download - page 55

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 North America Franchising Segment. North America franchising income before income taxes
increased approximately $900,000 in 2013. Excluding the impact of the 53rd week in 2012 of
approximately $1.4 million, income increased approximately $2.3 million due to the previously
mentioned royalty revenue increase, partially offset by both an increase in incentives and a
reduction in royalties attributable to the Company’s net acquisition of the 50 Denver and
Minneapolis restaurants.
 International Segment. The international segment reported income before income taxes of
approximately $2.8 million in 2013 compared to $3.1 million in 2012, a decrease of
approximately $300,000. Excluding the 2012 impact of the 53rd week of approximately $400,000,
income increased approximately $150,000. This increase was primarily due to the increase in
units and comparable sales of 7.5%, which provided higher royalties. Additionally, United
Kingdom results improved by approximately $1.0 million due to increased units and higher
comparable sales. These increases were substantially offset by higher operating losses in our
Company-owned China market of approximately $2.1 million, including $215,000 of incremental
losses associated with the additional month of operations in the fourth quarter of 2013, as
previously discussed. The losses in the China market include a reduction in operating results at
our Company-owned restaurants, primarily associated with new restaurants, as well as write off
costs associated with closing one location and the disposition of certain other assets. Additionally,
2013 reflects higher infrastructure and support costs to expand in this underpenetrated market.
Based on prior experience in other underpenetrated markets, some operating losses can occur as
the business is being established.
 All Others Segment. The “All others” segment income increased approximately $600,000.
Excluding the impact of the 53rd week in 2012 of approximately $200,000, income increased
approximately $800,000. The increase was primarily due to an improvement in our online and
mobile ordering (“eCommerce”) business due to higher online volumes. This increase was
somewhat offset by reduced operating results at Preferred, due to reduced cost direct mail
campaigns offered to our domestic franchised restaurants.
 Unallocated Corporate Segment. Unallocated corporate expenses decreased $7.9 million.
Excluding the impact of the 53rd week and the Incentive Contribution in 2012 of $5.7 million,
expenses decreased $2.2 million. The components of unallocated corporate expenses excluding
the 53rd week and the Incentive Contribution were as follows (in thousands):
Year Ended Year Ended
December 29, December 30, Increase
2013 2012 (Decrease)
General and administrative (a) 34,819$ 36,911$ (2,092)$
Net interest expense (b) 482 1,476 (994)
Depreciation expense 6,845 7,193 (348)
Perfect Pizza lease obligation (c) 305 (135) 440
Other (income) (d) (426) (1,194) 768
Total unallocated corporate expenses 42,025$ 44,251$ (2,226)$
(a) The decrease in unallocated general and administrative costs was primarily due to 2012
including higher legal and professional fees of approximately $3.2 million, primarily
associated with the Agne litigation reserves (see “Note 17” of “Notes to Consolidated
Financial Statements” for additional information). In addition, management incentives, net of
salary increases, were lower in 2013 by approximately $1.5 million. This was offset by
various other general and administrative cost increases including higher travel, operators’
conference and information technology costs.
(b) The decrease in net interest was primarily due to a decrease in the change in redemption
value of a mandatorily redeemable noncontrolling interest in a joint venture, partially offset