Papa Johns 2012 Annual Report Download - page 91

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85
21. Segment Information
We have defined six reportable segments: domestic Company-owned restaurants, domestic commissaries,
North America franchising, international operations, variable interest entities (“VIEs”) 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, 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 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 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. International franchisees are defined as all franchise
operations outside of the United States and Canada. BIBP, which operated through February 2011, was a
VIE in which we were deemed the primary beneficiary, as defined in Note 5, and is the only activity
reflected in the VIE segment. 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 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 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. The accounting policies of the segments are the same as those described in the summary of
significant accounting policies (see Note 2).