Papa Johns 2009 Annual Report Download - page 100

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93
19. Employee Benefit Plans (continued)
In addition, we maintain a nonqualified deferred compensation plan available to certain key employees
and directors. Under this plan, the participants may defer a certain amount of their compensation, which
is credited to the participants’ accounts. The participant-directed investments associated with this plan
are included in other long-term assets ($11.8 million and $8.9 million at December 27, 2009 and
December 28, 2008, respectively) and the associated liabilities ($10.7 million and $8.4 million at
December 27, 2009 and December 28, 2008, respectively) are included in other long-term liabilities in
the accompanying consolidated balance sheets.
Most administrative costs of the 401(k) Plan and the nonqualified deferred compensation plan are paid by
the Company and are not significant.
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 $260,000, $312,000 and $436,000 associated with the pension plan for the fiscal years ended
2009, 2008 and 2007, respectively. We recorded a liability of $83,000, and a corresponding entry to
accumulated other comprehensive income (loss) of $52,000, net of tax, related to the estimated unfunded
pension obligation at December 27, 2009. In 2008, we recorded a liability of $141,000, and a
corresponding entry to accumulated other comprehensive income (loss) of $88,000, net of tax, related to
the estimated unfunded pension obligation at December 28, 2008. The future annual contributions and
expense to the PJUK pension plan are expected to approximate $300,000.
20. Segment Information
We have defined six reportable segments: domestic restaurants, domestic commissaries, domestic
franchising, international operations, variable interest entities (VIEs) and “all other” units.
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 3, 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 and certain partnership development activities.
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.