Segment Information

3 Months Ended

Mar. 25, 2012

Segment Information

8.   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 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
	March 25, 2012			March 27, 2011
	(As Restated)			(As Restated)
Revenues from external customers:
Domestic Company-owned restaurants	$	143,815		$	138,671
Domestic commissaries		137,610			127,672
North America franchising		20,740			19,916
International		16,853			12,761
All others		12,258			13,447
Total revenues from external customers	$	331,276		$	312,467
Intersegment revenues:
Domestic commissaries	$	41,537		$	38,100
North America franchising		549			548
International		54			47
Variable interest entities		-			25,117
All others		3,021			2,555
Total intersegment revenues	$	45,161		$	66,367
Income (loss) before income taxes:
Domestic Company-owned restaurants	$	12,321		$	10,883
Domestic commissaries		11,166			9,554
North America franchising		18,140			18,009
International		272			(816	)
All others		395			(378	)
Unallocated corporate expenses		(14,784	)		(10,496	)
Elimination of intersegment profits		10			(703	)
Total income before income taxes	$	27,520		$	26,053
Property and equipment:
Domestic Company-owned restaurants	$	177,423
Domestic commissaries		87,014
International		18,047
All others		41,053
Unallocated corporate assets		133,452
Accumulated depreciation and amortization		(272,822	)
Net property and equipment	$	184,167