Baskin Robbins 2011 Annual Report Download - page 99

Download and view the complete annual report

Please find page 99 of the 2011 Baskin Robbins annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 127

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127

Total rental income for all leases and subleases consisted of the following (in thousands):
Fiscal year ended
December 31,
2011
December 25,
2010
December 26,
2009
Base rentals ............................ $66,061 66,630 67,825
Contingent rentals ....................... 26,084 24,472 25,826
$92,145 91,102 93,651
The impact of the amortization of our unfavorable operating leases acquired resulted in an increase in rental
income and a decrease in rental expense as follows (in thousands):
Fiscal year ended
December 31,
2011
December 25,
2010
December 26,
2009
Increase in rental income .................. $1,392 1,806 2,157
Decrease in rental expense ................ 1,838 2,514 2,870
Total increase in operating income ...... $3,230 4,320 5,027
Following is the estimated impact of the amortization of our unfavorable operating leases acquired for each of
the next five years (in thousands):
Decrease in
rental expense
Increase in
rental income
Total increase
in operating
income
Fiscal year:
2012 ............................. $1,286 1,026 2,312
2013 ............................. 1,118 937 2,055
2014 ............................. 1,062 845 1,907
2015 ............................. 958 793 1,751
2016 ............................. 902 655 1,557
(11) Segment information
The Company is strategically aligned into two global brands, Dunkin’ Donuts and Baskin-Robbins, which are
further segregated between U.S. operations and international operations. As such, the Company has determined
that it has four operating segments, which are its reportable segments: Dunkin’ Donuts U.S., Dunkin’ Donuts
International, Baskin-Robbins U.S., and Baskin-Robbins International. Dunkin’ Donuts U.S., Baskin-Robbins
U.S., and Dunkin’ Donuts International primarily derive their revenues through royalty income, franchise fees,
and rental income. Baskin-Robbins U.S. also derives revenue through license fees from a third-party license
agreement. Baskin-Robbins International primarily derives its revenues from the manufacturing and sales of ice
cream products, as well as royalty income, franchise fees, and license fees. The operating results of each segment
are regularly reviewed and evaluated separately by the Company’s senior management, which includes, but is not
limited to, the chief executive officer and the chief financial officer. Senior management primarily evaluates the
performance of its segments and allocates resources to them based on earnings before interest, taxes,
depreciation, amortization, impairment charges, gains and losses on debt extinguishment and refinancing
transactions, other gains and losses, and unallocated corporate charges, referred to as segment profit. When
senior management reviews a balance sheet, it is at a consolidated level. The accounting policies applicable to
each segment are consistent with those used in the consolidated financial statements.
Subsequent to December 25, 2010, and as part of fiscal year 2011 management reporting, intersegment royalties and
rental income earned from company-owned restaurants are now eliminated from Dunkin’ Donuts U.S. segment
revenues. Revenues for all periods presented in the tables below have been restated to reflect these changes.
-89-