Segment Information

9 Months Ended

Sep. 28, 2014

Segment Information

Segment Information

8. 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						Nine Months Ended
	Sept. 28, 2014			Sept. 29, 2013			Sept. 28, 2014			Sept. 29, 2013
Revenues from external customers:
Domestic Company-owned restaurants	$	169,076		$	152,662		$	517,269		$	465,713
Domestic commissaries	149,224			138,044			463,852			421,941
North America franchising	22,348			19,682			66,221			61,410
International	26,392			22,388			75,594			63,451
All others	23,359			13,566			49,704			38,617
Total revenues from external customers	$	390,399		$	346,342		$	1,172,640		$	1,051,132
Intersegment revenues:
Domestic commissaries	$	53,830		$	46,408		$	160,143		$	139,320
North America franchising	574			530			1,761			1,635
International	78			69			236			209
All others	6,421			3,718			18,238			10,204
Total intersegment revenues	$	60,903		$	50,725		$	180,378		$	151,368
Income (loss) before income taxes:
Domestic Company-owned restaurants	$	8,133		$	5,535		$	32,069		$	24,666
Domestic commissaries	8,897			6,473			26,174			26,278
North America franchising	19,023			16,516			56,389			52,134
International	1,436			945			4,071			2,152
All others	(298		)	590			(150		)	2,402
Unallocated corporate expenses	(12,242		)	(8,544		)	(35,405		)	(28,475		)
Elimination of intersegment losses (profits)	(731		)	(252		)	(1,284		)	(989		)
Total income before income taxes	$	24,218		$	21,263		$	81,864		$	78,168
Property and equipment:
Domestic Company-owned restaurants	$	205,553
Domestic commissaries	106,815
International	26,317
All others	44,686
Unallocated corporate assets	164,718
Accumulated depreciation and amortization	(329,636		)
Net property and equipment	$	218,453