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.