Baskin Robbins 2011 Annual Report Download - page 62

The increase in Baskin-Robbins International segment profit for fiscal year 2011 resulted primarily from the
increase in royalty income noted above and a $1.8 million increase in net margin on sales of ice cream products
driven by higher sales volume. Offsetting these increases in segment profit was an increase in personnel costs
and travel of $1.9 million.
Fiscal year 2010 compared to fiscal year 2009
Consolidated results of operations
Fiscal year
2009
Fiscal year
2010
Increase (Decrease)
$ %
(In thousands, except percentages)
Franchise fees and royalty income ................... $344,020 359,927 15,907 4.6%
Rental income ................................... 93,651 91,102 (2,549) (2.7)%
Sales of ice cream products ......................... 75,256 84,989 9,733 12.9%
Other revenues ................................... 25,146 41,117 15,971 63.5%
Total revenues ............................... $538,073 577,135 39,062 7.3%
The increase in total revenues from fiscal 2009 to fiscal 2010 was primarily driven by an increase in royalty
income of $15.1 million, or 4.7%, from the prior year as the result of Dunkin’ Donuts U.S. systemwide sales
growth. Other revenues also increased $16.0 million primarily as a result of the acquisition of company-owned
restaurants, which contributed an additional $15.2 million of revenue in fiscal 2010. Sales of ice cream products
also contributed to the increase in total revenues from fiscal 2009 to fiscal 2010, which were primarily driven by
strong sales in the Middle East. These increases in revenue were offset by a decline in rental income of $2.5
million primarily as a result of a decline in the number of leased properties.
Fiscal year
2009
Fiscal year
2010
Increase (Decrease)
$ %
(In thousands, except percentages)
Occupancy expenses—franchised restaurants .......... $ 51,964 53,739 1,775 3.4%
Cost of ice cream products ......................... 47,432 59,175 11,743 24.8%
General and administrative expenses, net ............. 197,005 223,620 26,615 13.5%
Depreciation and amortization ...................... 62,911 57,826 (5,085) (8.1)%
Impairment charges .............................. 8,517 7,075 (1,442) (16.9)%
Total operating costs and expenses .............. $367,829 401,435 33,606 9.1%
Equity in net income of joint ventures ................ 14,301 17,825 3,524 24.6%
Operating income ............................ $184,545 193,525 8,980 4.9%
Occupancy expenses for franchised restaurants increased $1.8 million from fiscal 2009 to fiscal 2010 resulting
primarily from the impact of lease reserves, offset by a decline in the number of leased properties. Cost of ice
cream products increased 24.8% from the prior year, as compared to a 12.9% increase in sales of ice cream
products, primarily as the result of unfavorable commodity prices and foreign exchange.
The increase in other general and administrative expenses from fiscal 2009 to fiscal 2010 was driven by
increased cost of sales for company-owned restaurants acquired during 2010 of $15.0 million. Also contributing
to the increase in general and administrative expenses was an increase in payroll and related benefit costs of $6.8
million, or 6.0%, as a result of higher incentive compensation payouts and 401(k) matching contributions.
Increased professional fees and legal costs driven by information technology enhancements and legal settlement
reserves also contributed approximately $10.6 million to the increase in general administrative expenses. These
increased expenses were offset by a decrease in bad debt and other reserves of $6.7 million.
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