Baskin Robbins 2012 Annual Report Download - page 39

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(f) Represents income tax benefits resulting from the settlement of historical tax positions settled during the
period, primarily related to the accounting for the acquisition of the Company by private equity firms in
2006.
(g) Represents deferred tax expense recognized due to an increase in our overall state tax rate for a shift in the
apportionment of income to state jurisdictions, as a result of the closure of the Peterborough manufacturing
plant and transition to Dean Foods.
(9) Represents period end points of distribution.
(10) Represents the growth in average weekly sales for franchisee- and company-owned restaurants that have been open at
least 54 weeks that have reported sales in the current and comparable prior year week.
(11) Comparable store sales growth data was not available for our international segments until fiscal year 2012.
(12) Franchisee-reported sales include sales at franchisee restaurants, including joint ventures.
(13) Company-owned store sales include sales at restaurants majority owned and operated by Dunkin’ Brands.
(14) Systemwide sales growth represents the percentage change in sales at both franchisee- and company-owned
restaurants from the comparable period of the prior year. Changes in systemwide sales are driven by changes in
average comparable store sales and changes in the number of restaurants.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion of our financial condition and results of operations should be read in conjunction with the selected
financial data and the audited financial statements and related notes appearing elsewhere in this Annual Report on Form 10-K.
This discussion contains forward-looking statements about our markets, the demand for our products and services and our
future results and involves numerous risks and uncertainties. Forward-looking statements can be identified by the fact that they
do not relate strictly to historical or current facts and generally contain words such as “believes,” “expects,” “may,” “will,”
“should,” “seeks,” “approximately,” “intends,” “plans,” “estimates,” or “anticipates” or similar expressions. Our forward-
looking statements are subject to risks and uncertainties, which may cause actual results to differ materially from those
projected or implied by the forward-looking statement. Forward-looking statements are based on current expectations and
assumptions and currently available data and are neither predictions nor guarantees of future events or performance. You
should not place undue reliance on forward-looking statements, which speak only as of the date hereof. See “Risk factors” for
a discussion of factors that could cause our actual results to differ from those expressed or implied by forward-looking
statements.
Introduction and overview
We are one of the world’s leading franchisors of quick service restaurants (“QSRs”) serving hot and cold coffee and baked
goods, as well as hard serve ice cream. We franchise restaurants under our Dunkin’ Donuts and Baskin-Robbins brands. With
over 17,400 points of distribution in 55 countries, we believe that our portfolio has strong brand awareness in our key markets.
QSR is a restaurant format characterized by counter or drive-thru ordering and limited or no table service. As of December 29,
2012, Dunkin’ Donuts had 10,479 global points of distribution with restaurants in 38 U.S. states and the District of Columbia
and in 31 foreign countries. Baskin-Robbins had 6,980 global points of distribution as of the same date, with restaurants in 44
U.S. states and the District of Columbia and in 45 foreign countries.
We are organized into four reporting segments: Dunkin’ Donuts U.S., Dunkin’ Donuts International, Baskin-Robbins U.S., and
Baskin-Robbins International. We generate revenue from five primary sources: (i) royalty income and franchise fees associated
with franchised restaurants, (ii) rental income from restaurant properties that we lease or sublease to franchisees, (iii) sales of
ice cream products to franchisees in certain international markets, (iv) retail store revenue at our company-owned restaurants,
and (v) other income including fees for the licensing of our brands for products sold in non-franchised outlets, the licensing of
the right to manufacture Baskin-Robbins ice cream sold to U.S. franchisees, refranchising gains, transfer fees from franchisees,
and online training fees.
Approximately 64% of our revenue for fiscal year 2012 was derived from royalty income and franchise fees. Rental income
from franchisees that lease or sublease their properties from us accounted for 15% of our revenue for fiscal year 2012. An
additional 14% of our revenue for fiscal year 2012 was generated from sales of ice cream products to Baskin-Robbins
franchisees in certain international markets. The balance of our revenue for fiscal year 2012 consisted of revenue from our
company-owned restaurants, license fees on products sold in non-franchised outlets, license fees on sales of ice cream products
to Baskin-Robbins franchisees in the U.S., refranchising gains, transfer fees from franchisees, and online training fees.
Franchisees fund the vast majority of the cost of new restaurant development. As a result, we are able to grow our system with
lower capital requirements than many of our competitors. With only 35 company-owned points of distribution as of
December 29, 2012, we are less affected by store-level costs, profitability and fluctuations in commodity costs than other QSR
operators.