Papa Johns 2007 Annual Report Download - page 97

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21. Employee Benefit Plans (continued)
PJUK, the Company’s United Kingdom subsidiary operation, provided a pension plan that was frozen in
1999. There are approximately 20 participants in the PJUK pension plan. The Company recorded
expense of $436,000, $296,000 and $178,000 associated with the pension plan for the fiscal years ended
2007, 2006 and 2005, respectively. We recorded a liability of $925,000, and a corresponding entry to
accumulated other comprehensive income (loss) of $584,000 net of tax, related to the estimated unfunded
pension obligation at December 31, 2006. There was not an unfunded pension obligation as of December
30, 2007. The annual contributions and expense to the PJUK pension plan are expected to approximate
$400,000.
22. Segment Information
We have defined five reportable segments: domestic restaurants, domestic commissaries, domestic
franchising, international operations and variable interest entities (VIEs).
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 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 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 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. VIEs
consist of entities in which we are the primary beneficiary, as defined in Note 5, and include BIBP and
certain franchisees to which we have extended loans. 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 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. 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. The accounting policies of the segments are the same as those described in the summary of
significant accounting policies (see Note 2).