Papa Johns 2015 Annual Report Download - page 54

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41
Discussion of Operating Results
Our income before income taxes totaled $114.3 million in 2014, as compared to $106.1 million in 2013,
an increase of approximately $8.1 million. Income before income taxes is summarized in the following
table on a reporting segment basis:
Dec. 28, Dec. 29, Increase
(In thousands) 2014 2013 (Decrease)
Domestic Company-owned restaurants 40,969$ 34,590$ 6,379$
Domestic commissaries 39,317 37,804 1,513
North America franchising 77,009 70,201 6,808
International 7,250 2,803 4,447
All others (9) 3,490 (3,499)
Unallocated corporate expenses (49,440) (41,025) (8,415)
Elimination of intersegment profits (841) (1,754) 913
Total income before income taxes (a) 114,255$ 106,109$ 8,146$
Year Ended
(a) Includes FOCUS system rollout costs of approximately $3.7 million in 2014. See the FOCUS System
section above for additional information.
Changes in income before income taxes for 2014 in comparison to 2013 are summarized on a segment
basis as follows:
• Domestic Company-owned Restaurant Segment. Domestic Company-owned restaurants’
income before income taxes increased $6.4 million due to the 8.2% increase in comparable sales,
partially offset by higher commodities and higher automobile insurance claims costs of
approximately $3.5 million. Additionally, 2014 includes depreciation expense of approximately
$1.2 million associated with FOCUS equipment costs.
• Domestic Commissaries Segment. Domestic commissaries’ income before income taxes
increased $1.5 million primarily due to higher margins and higher sales volumes, which were
somewhat offset by higher workers’ compensation and automobile insurance claims costs of
approximately $2.6 million and higher costs associated with various ongoing commissary
initiatives.
• North America Franchising Segment. North America franchising income before income taxes
increased approximately $6.8 million in 2014 due to the previously mentioned royalty revenue
increase.
• International Segment. The international segment reported income before income taxes of
approximately $7.3 million in 2014 compared to $2.8 million in 2013. The increase of $4.4
million was primarily due to an increase in units and comparable sales of 7.4%, which resulted in
both higher royalties and contributed to an improvement of $3.1 million in the United Kingdom
results. The increases were partially offset by unfavorable China Company-owned results of
approximately $700,000 (losses of approximately $3.4 million in 2014 and $2.7 million in 2013).
The unfavorable results were primarily due to restaurant disposition costs for 11 restaurants,
which were approximately $700,000 higher in 2014. Additionally, the 2013 China results
included $215,000 of incremental losses associated with the additional month of operations in the
fourth quarter of 2013.
• All Others Segment. The “All others” segment, which primarily includes our online and mobile
ordering business and our wholly-owned print and promotions subsidiary, Preferred Marketing
Solutions, decreased approximately $3.5 million. The decrease was primarily due to higher
infrastructure costs to support our digital ordering business and a lower margin at our print and