Segment Information

6 Months Ended

Jun. 24, 2012

Segment Information

9.  Segment Information

We have defined six reportable segments: domestic Company-owned restaurants, domestic commissaries, North America franchising, international operations, variable interest entities (“VIEs”) 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 strips, chicken wings, 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 our 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. BIBP Commodities, Inc., a franchisee-owned corporation, which operated through February 2011, was a VIE in which we were deemed the primary beneficiary, and is the only activity reflected in the VIE segment. 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 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 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 24, 2012			June 26, 2011			June 24, 2012			June 26, 2011
Revenues from external customers:
Domestic Company-owned restaurants	$	143,527		$	127,641		$	287,342		$	266,312
Domestic commissaries		126,593			121,027			264,203			248,699
North America franchising		19,307			18,227			40,047			38,143
International		17,381			14,269			34,234			27,030
All others		11,771			12,370			24,029			25,817
Total revenues from external customers	$	318,579		$	293,534		$	649,855		$	606,001
Intersegment revenues:
Domestic commissaries	$	39,953		$	35,872		$	81,490		$	73,972
North America franchising		561			535			1,110			1,083
International		56			58			110			105
Variable interest entities		-			-			-			25,117
All others		2,664			2,571			5,685			5,126
Total intersegment revenues	$	43,234		$	39,036		$	88,395		$	105,403
Income (loss) before income taxes:
Domestic Company-owned restaurants	$	9,358		$	7,421		$	21,679		$	18,304
Domestic commissaries		7,978			4,321			19,144			13,875
North America franchising		16,619			16,240			34,759			34,249
International		320			(250	)		592			(1,066	)
All others		471			(298	)		866			(676	)
Unallocated corporate expenses		(10,025	)		(8,517	)		(25,191	)		(18,286	)
Elimination of intersegment profits		(481	)		150			(471	)		(553	)
Total income before income taxes	$	24,240		$	19,067		$	51,378		$	45,847
Property and equipment:
Domestic Company-owned restaurants	$	179,140
Domestic commissaries		89,308
International		19,032
All others		42,668
Unallocated corporate assets		136,340
Accumulated depreciation and amortization		(279,921	)
Net property and equipment	$	186,567