Segment Information

6 Months Ended

Jun. 29, 2014

Segment Information

Segment Information

7. Segment Information

We have five reportable segments: domestic Company-owned restaurants, domestic commissaries, North America franchising, international operations, and “all other” units.

The domestic Company-owned restaurant segment consists of the operations of all domestic (“domestic” is defined as contiguous United States) Company-owned restaurants and derives its revenues principally from retail sales of pizza and side items, such as breadsticks, cheesesticks, chicken poppers, chicken wings, cookie and dessert pizza and soft drinks to the general public. The domestic commissary segment consists of the operations of our regional dough production and product distribution centers and derives its revenues principally from the sale and distribution of food and paper products to domestic Company-owned and franchised restaurants. The North America franchising segment consists of our franchise sales and support activities and derives its revenues from sales of franchise and development rights and collection of royalties from our franchisees located in the United States and Canada. The international operations segment principally consists of Company-owned restaurants in China and distribution sales to franchised Papa John’s restaurants located in the United Kingdom, Mexico and China and our franchise sales and support activities, which derive revenues from sales of franchise and development rights and the collection of royalties from our international franchisees. International franchisees are defined as all franchise operations outside of the United States and Canada. All other business units that do not meet the quantitative thresholds for determining reportable segments, which are not operating segments, we refer to as our “all other” segment, which consists of operations that derive revenues from the sale, principally to Company-owned and franchised restaurants, of printing and promotional items, risk management services, and information systems and related services used in restaurant operations, including our point-of-sale system, online and other technology-based ordering platforms.

Generally, we evaluate performance and allocate resources based on profit or loss from operations before income taxes and intercompany eliminations. Certain administrative and capital costs are allocated to segments based upon predetermined rates or actual estimated resource usage. We account for intercompany sales and transfers as if the sales or transfers were to third parties and eliminate the activity in consolidation.

Our reportable segments are business units that provide different products or services. Separate management of each segment is required because each business unit is subject to different operational issues and strategies. No single external customer accounted for 10% or more of our consolidated revenues.

Our segment information is as follows (in thousands):

	Three Months Ended						Six Months Ended
	June 29, 2014			June 30, 2013			June 29, 2014			June 30, 2013
Revenues from external customers:
Domestic Company-owned restaurants	$	170,000		$	155,153		$	348,193		$	313,051
Domestic commissaries	150,581			140,003			314,628			283,897
North America franchising	21,115			20,449			43,873			41,728
International	25,573			21,137			49,202			41,063
All others	13,595			12,444			26,345			25,051
Total revenues from external customers	$	380,864		$	349,186		$	782,241		$	704,790
Intersegment revenues:
Domestic commissaries	$	51,592		$	46,115		$	106,313		$	92,912
North America franchising	583			552			1,187			1,105
International	90			73			158			140
All others	8,087			3,318			11,817			6,486
Total intersegment revenues	$	60,352		$	50,058		$	119,475		$	100,643
Income (loss) before income taxes:
Domestic Company-owned restaurants	$	10,651		$	8,175		$	23,936		$	19,131
Domestic commissaries	6,846			9,642			17,277			19,805
North America franchising	17,882			17,396			37,366			35,618
International	1,903			866			2,635			1,207
All others	(442		)	1,153			148			1,812
Unallocated corporate expenses	(10,702		)	(10,413		)	(23,163		)	(19,931		)
Elimination of intersegment losses (profits)	98			(211		)	(553		)	(737		)
Total income before income taxes	$	26,236		$	26,608		$	57,646		$	56,905
Property and equipment:
Domestic Company-owned restaurants	$	203,632
Domestic commissaries	105,711
International	27,711
All others	43,113
Unallocated corporate assets	161,786
Accumulated depreciation and amortization	(323,505		)
Net property and equipment	$	218,448