Baskin Robbins 2011 Annual Report Download - page 65

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Baskin-Robbins U.S.
Fiscal year
2009
Fiscal year
2010
Increase (Decrease)
$ %
(In thousands, except percentages)
Royalty income .................................. $26,743 25,039 (1,704) (6.4)%
Franchise fees ................................... 1,763 1,709 (54) (3.1)%
Rental income ................................... 5,409 4,842 (567) (10.5)%
Sales of ice cream products ......................... 2,371 2,307 (64) (2.7)%
Other revenues .................................. 10,007 9,023 (984) (9.8)%
Total revenues ............................... 46,293 42,920 (3,373) (7.3)%
Segment profit ................................... 33,459 27,607 (5,852) (17.5)%
The decline in Baskin-Robbins U.S. revenue from fiscal 2009 to fiscal 2010 was driven by the decline in
systemwide sales, which impacted both royalty income, which declined $1.7 million, and licensing income
earned through the sale of ice cream to franchisees by a third-party, which declined $0.6 million. Rental income
also decreased $0.6 million in fiscal 2010 driven by a decline in the number of subleases, as well as revised
sublease terms which resulted in adjustments of straight-line rental income.
Baskin-Robbins U.S. segment profit declined from fiscal 2009 to fiscal 2010 primarily as a result of the declines
in royalty, licensing, and rental income. Also contributing to the decline in segment profit from 2009 was
additional gift certificate breakage income recorded in 2009 of $2.6 million, as the Company determined during
fiscal year 2009 that sufficient historical patterns existed to estimate breakage and therefore recognized a
cumulative adjustment for all gift certificates outstanding.
Baskin-Robbins International
Fiscal year
2009
Fiscal year
2010
Increase (Decrease)
$ %
(In thousands, except percentages)
Royalty income ................................. $ 4,987 6,191 1,204 24.1%
Franchise fees ................................... 1,252 1,289 37 3.0%
Rental income ................................... 584 572 (12) (2.1)%
Sales of ice cream products ........................ 72,885 82,682 9,797 13.4%
Other revenues .................................. 1,056 551 (505) (47.8)%
Total revenues .............................. 80,764 91,285 10,521 13.0%
Segment profit .................................. 41,212 41,596 384 0.9%
The growth in Baskin-Robbins International revenue from fiscal 2009 to fiscal 2010 resulted primarily from an
increase in ice cream sales of $9.8 million, which was driven by higher sales in the Middle East. Royalty income
also increased $1.2 million in fiscal 2010 due to growth in systemwide sales, specifically in Japan, South Korea,
and Russia.
Baskin-Robbins International segment profit remained relatively flat from fiscal 2009 to fiscal 2010. Joint
venture income from the Baskin-Robbins businesses in South Korea and Japan increased $3.3 million from 2009,
driven by systemwide sales growth in both countries. Royalty income also increased $1.2 million, as noted
above. Offsetting these increases in segment profit was a decline in net margin on ice cream sales of $1.9 million,
primarily as the result of unfavorable commodity prices and foreign exchange. Also offsetting the increases in
segment profit were increases in travel, professional fees, and other general and administrative costs totaling $1.8
million.
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