Segment Information

6 Months Ended

Jun. 26, 2016

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, including 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 26, 2016		June 28, 2015		June 26, 2016		June 28, 2015
Revenues from external customers:
Domestic Company-owned restaurants	$	204,248	$	185,962	$	409,927	$	383,249
Domestic commissaries		150,895		149,007		306,849		311,340
North America franchising		25,302		23,276		51,778		48,900
International		28,460		26,326		55,915		51,752
All others		14,059		14,420		27,090		36,034
Total revenues from external customers	$	422,964	$	398,991	$	851,559	$	831,275
Intersegment revenues:
Domestic commissaries	$	57,722	$	54,459	$	116,048	$	112,346
North America franchising		739		671		1,452		1,342
International		67		75		132		150
All others		4,075		3,694		8,172		7,626
Total intersegment revenues	$	62,603	$	58,899	$	125,804	$	121,464
Income (loss) before income taxes:
Domestic Company-owned restaurants	$	15,325	$	14,617	$	35,512	$	33,097
Domestic commissaries		11,682		10,702		23,228		22,502
North America franchising		22,445		20,054		46,025		42,373
International		2,875		2,279		5,913		3,623
All others		425		(117)		476		326
Unallocated corporate expenses		(17,079)		(29,949)		(33,411)		(47,154)
Elimination of intersegment profit		(473)		(55)		(1,134)		(800)
Total income before income taxes	$	35,200	$	17,531	$	76,609	$	53,967
Property and equipment:
Domestic Company-owned restaurants	$	227,023
Domestic commissaries		112,666
International		16,854
All others		50,949
Unallocated corporate assets		186,922
Accumulated depreciation and amortization		(376,886)
Net property and equipment	$	217,528