| Segment Information |
2. 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 and, to a lesser extent, other products, from the Company’s supply chain center operations in the U.S. and Canada. The international franchise segment includes operations related to the Company’s franchising business in foreign markets. The Company’s chief operating decision maker is its Chief Executive Officer, and beginning in the first quarter of 2026, he evaluates the performance of the Company’s segments and allocates resources to them based on Segment Adjusted Income from Operations which represents income from operations for the reportable segments, excluding gains and losses from the sale of assets, refranchising gains and losses and certain corporate administrative costs that have not been allocated to a reportable segment. The Company’s chief operating decision maker uses Segment Adjusted Income from Operations to determine future business objectives and targets and for long-range planning for the reportable segments, as well as to evaluate their operating performance. The tables below summarize the financial information, including revenues, significant segment expenses, Segment Adjusted Income from Operations, capital expenditures and depreciation and amortization, concerning the Company’s reportable segments for the first quarters ended March 22, 2026 and March 23, 2025. Intersegment revenues are comprised of sales of food and, to a lesser extent, other products, from the supply chain segment to the Company-owned stores in the U.S. stores segment. Intersegment sales prices are market based.
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Fiscal Quarter Ended March 22, 2026 |
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U.S.
Stores |
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Supply
Chain |
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International
Franchise |
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Total |
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U.S. Company-owned stores |
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$ |
82,098 |
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$ |
— |
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$ |
— |
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$ |
82,098 |
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U.S. franchise royalties and fees |
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158,014 |
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— |
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— |
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158,014 |
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Supply chain |
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— |
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724,414 |
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— |
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724,414 |
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Supply chain - intersegment revenues |
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— |
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(25,441 |
) |
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— |
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(25,441 |
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International franchise royalties and fees |
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— |
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— |
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80,980 |
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80,980 |
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U.S. franchise advertising |
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130,529 |
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— |
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— |
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130,529 |
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Segment revenues |
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$ |
370,641 |
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$ |
698,973 |
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$ |
80,980 |
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$ |
1,150,594 |
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Cost of sales - food |
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24,935 |
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489,102 |
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— |
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514,037 |
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Cost of sales - labor |
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27,239 |
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64,379 |
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— |
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91,618 |
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Cost of sales - other (1) |
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19,873 |
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60,554 |
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— |
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80,427 |
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U.S. franchise advertising |
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130,529 |
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— |
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— |
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130,529 |
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General and administrative (2) |
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35,696 |
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19,426 |
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11,474 |
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66,596 |
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Segment Adjusted Income from Operations |
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$ |
132,369 |
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$ |
65,512 |
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$ |
69,506 |
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$ |
267,387 |
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Segment capital expenditures (3) |
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$ |
2,670 |
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$ |
5,248 |
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$ |
— |
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$ |
7,918 |
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Segment depreciation and amortization (4) |
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$ |
2,558 |
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$ |
9,753 |
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$ |
18 |
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$ |
12,329 |
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Significant segment expenses and Segment Adjusted Income from Operations in the table below for the first quarter ended March 23, 2025 have been recast to reflect the change in the measure of segment profit used by the Company’s chief operating decision maker.
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Fiscal Quarter Ended March 23, 2025 |
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U.S.
Stores |
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Supply
Chain |
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International
Franchise |
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Total |
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U.S. Company-owned stores |
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$ |
91,598 |
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$ |
— |
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$ |
— |
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$ |
91,598 |
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U.S. franchise royalties and fees |
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151,000 |
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— |
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— |
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151,000 |
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Supply chain |
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— |
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697,910 |
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— |
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697,910 |
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Supply chain - intersegment revenues |
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— |
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(27,986 |
) |
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— |
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(27,986 |
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International franchise royalties and fees |
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— |
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— |
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75,559 |
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75,559 |
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U.S. franchise advertising |
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123,975 |
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— |
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— |
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123,975 |
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Segment revenues |
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$ |
366,573 |
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$ |
669,924 |
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$ |
75,559 |
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$ |
1,112,056 |
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Cost of sales - food |
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27,211 |
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471,616 |
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— |
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498,827 |
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Cost of sales - labor |
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29,181 |
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61,882 |
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— |
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91,063 |
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Cost of sales - other (1) |
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20,520 |
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58,499 |
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— |
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79,019 |
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U.S. franchise advertising |
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123,975 |
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— |
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— |
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123,975 |
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General and administrative (2) |
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36,755 |
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14,321 |
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11,815 |
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62,891 |
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Segment Adjusted Income from Operations |
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$ |
128,931 |
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$ |
63,606 |
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$ |
63,744 |
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$ |
256,281 |
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Segment capital expenditures (3) |
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$ |
976 |
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$ |
5,510 |
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$ |
— |
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$ |
6,486 |
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Segment depreciation and amortization (4) |
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$ |
2,820 |
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$ |
9,212 |
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$ |
35 |
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$ |
12,067 |
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(1) |
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Cost of sales - other, includes delivery, occupancy costs (including rent, telephone, utilities, depreciation and amortization) and insurance expense. |
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(2) |
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General and administrative expense consists primarily of labor cost, depreciation and amortization, computer expenses, professional fees, travel and entertainment, rent, insurance and other. Gains and losses from the sale of assets and refranchising gains and losses are not included in the measurement of Segment Adjusted Income from Operations. Non-cash equity-based compensation expense is not allocated to the reportable segments. |
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(3) |
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The Company also had $8.6 million and $8.7 million of other capital expenditures not attributable to the reportable segments primarily representing capitalized software in the first quarters of 2026 and 2025, respectively. |
(4) |
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Segment depreciation and amortization reflects amounts included within cost of sales - other and general and administrative expenses. The Company also had $8.1 million and $8.3 million of depreciation and amortization expense included in general and administrative expense not allocated to the reportable segments in the first quarters of 2026 and 2025, respectively. |
The following table reconciles Segment Adjusted Income from Operations to income before provision for income taxes:
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Fiscal Quarter Ended |
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March 22,
2026 |
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March 23,
2025 |
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Segment Adjusted Income from Operations |
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$ |
267,387 |
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$ |
256,281 |
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General and administrative - unallocated (1) |
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(44,810 |
) |
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(46,186 |
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Gain on sale of assets |
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7,780 |
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— |
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Income from operations |
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230,357 |
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210,095 |
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Other (expense) income |
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(5,990 |
) |
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24,027 |
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Interest income |
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2,502 |
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3,945 |
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Interest expense |
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(46,227 |
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(45,585 |
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Income before provision for income taxes |
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$ |
180,642 |
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$ |
192,482 |
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(1) |
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Represents corporate administrative costs that have not been allocated to a reportable segment including labor (including non-cash equity-based compensation expense), depreciation and amortization, computer expenses, professional fees, travel and entertainment, rent, insurance and other corporate administrative costs. |
The Company’s chief operating decision maker is not regularly provided financial information related to the assets of the reportable segments, and he does not evaluate their performance or allocate resources to them based on assets. Therefore, total assets by reportable segment are not included in the Company’s segment disclosures.
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