10.Segment Information

We have five reportable segments: domestic Company-owned restaurants, North America 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 North America 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 in the United States and Canada. 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 segment principally consists of distribution sales to franchised Papa John’s restaurants located in the United Kingdom and Mexico 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, franchise contributions to marketing funds 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:


	Three Months Ended				Six Months Ended
	July 1,		June 25,		July 1,		June 25,
(In thousands)	2018		2017		2018		2017
Revenues
Domestic Company-owned restaurants	$	181,379	$	202,756	$	371,621	$	409,652
North America commissaries		153,455		160,059		315,168		331,399
North America franchising		23,912		26,588		48,718		54,195
International		34,652		30,230		70,184		58,748
All others		14,561		15,145		29,637		30,050
Total revenues	$	407,959	$	434,778	$	835,328	$	884,044

Intersegment revenues:
North America commissaries	$	51,492	$	59,202	$	107,366	$	120,938
North America franchising		1,016		751		2,035		1,515
International		73		68		143		131
All others		7,578		4,084		15,652		9,110
Total intersegment revenues	$	60,159	$	64,105	$	125,196	$	131,694

Income (loss) before income taxes:
Domestic Company-owned restaurants	$	8,304	$	15,550	$	15,533	$	31,037
North America commissaries (1)		8,730		12,088		17,340		24,332
North America franchising		21,380		23,999		43,739		48,874
International		2,278		3,265		5,815		7,609
All others (1) (2)		(1,728)		905		(2,638)		1,365
Unallocated corporate expenses (1) (2)		(19,324)		(19,086)		(37,454)		(35,467)
Elimination of intersegment (profits) losses		65		(1,263)		(268)		(421)
Total income before income taxes	$	19,705	$	35,458	$	42,067	$	77,329

Property and equipment:
Domestic Company-owned restaurants	$	229,887
North America commissaries		138,452
International		17,064
All others		65,245
Unallocated corporate assets		195,279
Accumulated depreciation and amortization		(418,205)
Net property and equipment	$	227,722

(1)

The Company refined its overhead allocation process in 2018 resulting in transfers of expenses from Unallocated corporate expenses of $3.4 million to other segments, primarily North America commissaries of $1.9 million and All others of $900,000 for the three months ended July 1, 2018. The six months ended July 1, 2018 included transfers of expenses from Unallocated and corporate expenses of $7.2 million to other segments, primarily North America commissaries of $4.2 million and All others of $1.8 million. These allocations were eliminated in consolidation.

(2)

Certain prior year amounts have been reclassified to conform to current year presentation.