Papa Johns 2002 Annual Report Download - page 65

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64
20. Segment Information
We have defined four reportable segments: domestic restaurants, domestic commissaries, domestic
franchising and international operations.
The domestic restaurant segment consists of the operations of all domestic (“domestic” is defined as
contiguous United States) Company-owned restaurants and derives its revenues from retail sales of pizza,
breadsticks, cheesesticks 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 from the sale and distribution of food and paper products to domestic Company-owned and
franchised restaurants. The domestic 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 domestic franchisees. The international operations segment principally consists of our
Company-owned restaurants located in the United Kingdom, our Company-owned commissary
operations located in the United Kingdom 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. All other business units that do not meet the quantitative thresholds for
determining reportable segments consist of operations that derive revenues from the sale, principally to
Company-owned and franchised restaurants, of restaurant equipment, printing and promotional items, risk
management services, and information systems and related services used in restaurant operations.
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. The accounting policies of the segments are
the same as those described in the summary of significant accounting policies (see Note 2). We account
for intercompany sales and transfers as if the sales or transfers were to third parties and eliminate the
related profit 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.