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This excerpt taken from the AFCE 10-K filed Mar 14, 2007. Operating
Profit (Loss)
On a consolidated basis, operating losses were $6.9 million
in 2005, a $12.5 million improvement when compared to 2004.
Fluctuations in the various components of revenue and expense
giving rise to this change are discussed above. The following is
a general discussion of the fluctuations in operating profit by
business segment.
Our franchise operations include an allocation of direct and
indirect overhead charges incurred by our corporate operations
of $24.9 million in 2005, and $22.2 million in 2004.
Our company-operated restaurants include an allocation of direct
and indirect overhead charges incurred by our corporate
operations of $2.8 million in 2005, and $3.0 million
in 2004.
The $1.3 million unfavorable fluctuation in operating
profit associated with our franchise operations was principally
due to higher corporate allocations primarily for new business
development activities, partially offset by higher franchise
revenues.
The $1.8 million unfavorable fluctuation in operating loss
associated with our company-operated restaurants was principally
due to (1) fewer company-operated restaurants contributing
to our net operating performance and (2) damages and costs
from Hurricane Katrina in excess of accrued insurance proceeds;
partially offset by (3) lower asset impairments exclusive
of those resulting from Hurricane Katrina.
The $15.6 million favorable fluctuation in operating losses
associated with our corporate headquarters was principally due
to substantially lower general and administrative expenses and
lower lease termination costs associated with the closure of our
AFC corporate offices, partially offset by higher shareholder
litigation costs.
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