Segment Information

12 Months Ended

Dec. 30, 2018

(11)	Segment Information

The Company has three reportable segments: (i) U.S. Stores; (ii) Supply Chain; and (iii) International Franchise.

The Company’s operations are organized by management on the combined basis of line of business and geography. The U.S. Stores segment includes operations with respect to all franchised and Company-owned stores throughout the U.S. The Supply Chain segment primarily includes the distribution of food, equipment and supplies to stores from the Company’s supply chain center operations in the U.S. and Canada. The International Franchise segment primarily includes operations related to the Company’s franchising business in foreign markets.

The accounting policies of the reportable segments are the same as those described in Note 1. The Company evaluates the performance of its segments and allocates resources to them based on earnings before interest, taxes, depreciation, amortization and other, referred to as Segment Income.

The tables below summarize the financial information concerning the Company’s reportable segments for fiscal 2018, 2017 and 2016. Intersegment Revenues are comprised of sales of food, equipment and supplies from the Supply Chain segment to the Company-owned stores in the U.S. Stores segment. Intersegment sales prices are market based. The “Other” column as it relates to Segment Income and income from operations information below primarily includes corporate administrative costs. The “Other” column as it relates to capital expenditures primarily includes capitalized software, certain equipment and leasehold improvements. Tabular amounts presented below are in thousands.


	U.S. Stores (1)		Supply Chain		International Franchise (2)		Intersegment Revenues			Other			Total
Revenues-
2018	$	1,264,823	$	2,087,408	$	224,747	$	(144,111	)		—		$	3,432,867
2017		842,233		1,874,943		206,708		(135,905	)		—			2,787,979
2016		751,284		1,669,000		176,999		(124,655	)		—			2,472,628
Segment Income-
2018	$	335,989	$	176,714	$	174,700		N/A		$	(43,462	)	$	643,941
2017		306,406		163,077		161,263		N/A			(46,958	)		583,788
2016		271,794		144,130		138,487		N/A			(42,802	)		511,609
Income from Operations-
2018	$	329,044	$	162,392	$	174,503		N/A		$	(94,250	)	$	571,689
2017		298,852		151,622		161,066		N/A			(90,308	)		521,232
2016		261,826		133,745		138,306		N/A			(79,835	)		454,042
Capital Expenditures-
2018	$	15,717	$	61,652	$	134		N/A		$	42,171		$	119,674
2017		20,579		34,123		28		N/A			35,527			90,257
2016		18,225		11,527		642		N/A			31,143			61,537


(1)		The adoption of ASC 606 in 2018 resulted in the recognition of $358.5 million in revenue in 2018 related to U.S. franchise contributions to DNAF. In prior years, under accounting standards in effect at that time, the Company had presented these contributions net with the related disbursements in its consolidated statement of income. Refer to Note 1 to the consolidated financial statements for additional information related to the adoption of this new accounting standard.
(2)		In 2018, the Company began managing its franchised stores in Alaska and Hawaii as part of its U.S. Stores segment. Prior to 2018, store counts, retail sales and royalty revenues from these franchised stores were included in the Company’s international operations in the table above. Consolidated results of the Company have not been impacted by this change and prior year amounts have not been reclassified to conform to the current year presentation due to immateriality.

The following table reconciles total Segment Income to income before provision for income taxes:

	2018			2017			2016
Total Segment Income	$	643,941		$	583,788		$	511,609
Depreciation and amortization		(53,665	)		(44,369	)		(38,140	)
Gain (loss) on sale/disposal of assets		4,737			3,148			(863	)
Non-cash compensation expense		(22,792	)		(20,713	)		(18,564	)
Recapitalization-related expenses		(532	)		(622	)		—
Income from operations		571,689			521,232			454,042
Interest income		3,334			1,462			685
Interest expense		(146,345	)		(122,541	)		(110,069	)
Income before provision for income taxes	$	428,678		$	400,153		$	344,658

The following table summarizes the Company’s identifiable asset information as of December 30, 2018 and December 31, 2017:

	2018		2017
U.S. Stores (1)	$	211,554	$	216,994
U.S. supply chain		283,351		206,059
Total U.S. assets		494,905		423,053
International Franchise		21,094		19,728
International supply chain		24,049		24,925
Total international assets		45,143		44,653
Unallocated		367,337		369,047
Total consolidated assets	$	907,385	$	836,753

(1)	Identifiable assets for U.S. Stores include $112.7 million and $120.2 million of advertising fund assets, restricted, as of December 30, 2018 and December 31, 2017, respectively. The 2017 amounts were previously classified as unallocated and have been recast due to the adoption of ASC 606.

Unallocated assets primarily include cash and cash equivalents, restricted cash and cash equivalents, investments in marketable securities, certain long-lived assets and deferred income taxes.

The following table summarizes the Company’s goodwill balance as of December 30, 2018 and December 31, 2017:


	2018		2017
U.S. Stores	$	13,852	$	14,356
Supply Chain		1,067		1,067
Consolidated goodwill	$	14,919	$	15,423