Popeye's 2013 Annual Report Download - page 39

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23
Occupancy Expenses - Franchised Restaurants
Occupancy expenses - franchised restaurants was $3.4 million in 2013, a $0.5 million increase from 2012.The
increase was primarily due to $1.2 million occupancy expenses associated with the twenty-six restaurant properties
converted and leased to franchisees in Minnesota and California under percentage rent arrangements. The increase in
occupancy expenses for the converted properties were partially offset by lower occupancy expenses from properties
sold or leases assigned to franchisee operators.
General and Administrative Expenses
General and administrative expenses were $73.4 million in 2013, a$5.8 million increase from 2012. This increase
was primarily attributable to:
•$2.3 million increase in international franchise development and marketing support expenses,
•$1.0 million increase in domestic new restaurant development expenses,
•$0.7 million increase in marketing and menu development expenses,
•$0.5 million increase in multi-unit management expenses in new company-operated restaurant markets in
Indianapolis and Charlotte,
•$0.5 million increase in stock-based compensation expense, and
•$0.8 million increase in leadership development, global supply chain, domestic franchisee restaurant support
and other expenses, net.
General and administrative expenses remain among the most efficient in the industry at approximately 3.0% of
system wide sales during 2013 and 2012, respectively.
Depreciation and Amortization
Depreciation and amortization was $6.7 million compared to $4.6 million last year. The increase in depreciation
and amortization is primarily attributable to depreciation associated with new company-operated restaurants, restaurant
reimages, acquired restaurant properties converted and leased to franchisees in Minnesota and California, information
technology assets and our corporate support center facility.
Other Expenses (Income), Net
Other expense was $0.3 million in expense in 2013 compared to other income of $0.5 million last year. In 2013,
other expense included $0.4 million in loss on disposals of property and equipment offset by $0.1 million in net gain
on sales of assets, net. In 2012,other income includes a$0.3 million gain on the sale of real estate to a franchisee and
the recognition of $0.5 million in deferred gains related to seven properties formerly leased to a franchisee, partially
offset by $0.4 million loss on disposal of property and equipment and other expenses, net.
See Note 16 to our Consolidated Financial Statements for adescription of Other expenses (income), net for 2013
and 2012.
Operating Profit
Operating profit in 2013 was $58.2 million, a $6.9 million increase compared to 2012.Fluctuations in the components
of revenue and expense giving rise to this change are discussed above. The following is an analysis of the fluctuations
in operating profit by business segment. Operating profit for each reportable segment includes operating results directly
attributable to each segment.