Segment Information

6 Months Ended

Jun. 28, 2015

Segment Information

Segment Information

6.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 and wings, dessert items and canned or bottled beverages. 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 28, 2015			June 29, 2014			June 28, 2015			June 29, 2014
Revenues from external customers:
Domestic Company-owned restaurants	$	185,962		$	170,000		$	383,249		$	348,193
Domestic commissaries	149,007			150,581			311,340			314,628
North America franchising	23,276			21,115			48,900			43,873
International	26,326			25,573			51,752			49,202
All others	14,420			13,595			36,034			26,345
Total revenues from external customers	$	398,991		$	380,864		$	831,275		$	782,241
Intersegment revenues:
Domestic commissaries	$	54,459		$	51,592		$	112,346		$	106,313
North America franchising	671			583			1,342			1,187
International	75			90			150			158
All others	3,694			8,087			7,626			11,817
Total intersegment revenues	$	58,899		$	60,352		$	121,464		$	119,475
Income (loss) before income taxes:
Domestic Company-owned restaurants	$	14,617		$	10,651		$	33,097		$	23,936
Domestic commissaries	10,702			6,846			22,502			17,277
North America franchising	20,054			17,882			42,373			37,366
International	2,279			1,903			3,623			2,635
All others	(117		)	(442		)	326			148
Unallocated corporate expenses (1)	(29,949		)	(10,702		)	(47,154		)	(23,163		)
Elimination of intersegment losses (profits)	(55		)	98			(800		)	(553		)
Total income before income taxes	$	17,531		$	26,236		$	53,967		$	57,646
Property and equipment:
Domestic Company-owned restaurants	$	211,511
Domestic commissaries	109,200
International	27,287
All others	48,471
Unallocated corporate assets	172,713
Accumulated depreciation and amortization	(353,974		)
Net property and equipment	$	215,208

(1) Includes a $12.3 million legal settlement expense in the three- and six-month periods of 2015. See “Note 5” for additional information.