Segment Information

9 Months Ended

Sep. 27, 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						Nine Months Ended
	Sept. 27, 2015			Sept. 28, 2014			Sept. 27, 2015			Sept. 28, 2014
Revenues from external customers:
Domestic Company-owned restaurants	$	180,059		$	169,076		$	563,308		$	517,269
Domestic commissaries	145,863			149,224			457,203			463,852
North America franchising	22,285			22,348			71,185			66,221
International	27,001			26,392			78,753			75,594
All others	14,076			23,359			50,110			49,704
Total revenues from external customers	$	389,284		$	390,399		$	1,220,559		$	1,172,640
Intersegment revenues:
Domestic commissaries	$	53,398		$	53,830		$	165,744		$	160,143
North America franchising	643			574			1,985			1,761
International	73			78			223			236
All others	3,833			6,421			11,459			18,238
Total intersegment revenues	$	57,947		$	60,903		$	179,411		$	180,378
Income (loss) before income taxes:
Domestic Company-owned restaurants	$	8,088		$	8,133		$	41,185		$	32,069
Domestic commissaries	10,192			8,897			32,694			26,174
North America franchising	19,172			19,023			61,545			56,389
International	3,184			1,436			6,807			4,071
All others	(556		)	(298		)	(230		)	(150		)
Unallocated corporate expenses (1)	(13,482		)	(12,242		)	(60,636		)	(35,405		)
Elimination of intersegment losses (profits)	(341		)	(731		)	(1,141		)	(1,284		)
Total income before income taxes	$	26,257		$	24,218		$	80,224		$	81,864
Property and equipment:
Domestic Company-owned restaurants	$	215,945
Domestic commissaries	109,532
International	21,266
All others	49,541
Unallocated corporate assets	176,089
Accumulated depreciation and amortization	(363,236		)
Net property and equipment	$	209,137

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