Baskin Robbins 2013 Annual Report Download - page 50

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Fiscal year 2012 compared to fiscal year 2011
Consolidated results of operations
Fiscal year Increase (Decrease)
2012 2011 $ %
(In thousands, except percentages)
Franchise fees and royalty income $ 418,940 $ 398,474 20,466 5.1 %
Rental income 96,816 92,145 4,671 5.1 %
Sales of ice cream products 94,659 100,068 (5,409) (5.4)%
Sales at company-owned restaurants 22,922 12,154 10,768 88.6 %
Other revenues 24,844 25,357 (513) (2.0)%
Total revenues $ 658,181 628,198 29,983 4.8 %
Total revenues for the prior year benefited approximately $8.0 million from the impact of an extra week, consisting primarily of
additional royalty income and sales of ice cream products. Additionally, total revenues for fiscal year 2012 were unfavorably
impacted by approximately $5.8 million from a one-time delay in revenue recognition as a result of a change in shipping terms
related to the shift in ice cream manufacturing to Dean Foods.
Without the effect of these two items, total revenues increased $43.8 million, or 7.1%, in fiscal year 2012 driven by an increase
in royalty income, on a 52-week basis, of $28.4 million, or 7.9%, mainly as a result of Dunkin’ Donuts U.S. systemwide sales
growth. Sales at company-owned restaurants also increased $10.8 million, or 88.6%, as a result of company-owned stores
acquired during 2012 and the full year impact of company-owned stores acquired at the end of 2011. Also contributing to the
increase in total revenues was an increase in rental income of $4.7 million, or 5.1%, driven by incremental sales-based rental
income resulting from growth in Dunkin' Donuts U.S. systemwide sales.
Fiscal year Increase (Decrease)
2012 2011 $ %
(In thousands, except percentages)
Occupancy expenses – franchised restaurants $ 52,072 51,878 194 0.4 %
Cost of ice cream products 69,019 72,329 (3,310) (4.6)%
Company-owned restaurant expenses 23,133 12,854 10,279 80.0 %
General and administrative expenses, net 239,574 227,771 11,803 5.2 %
Depreciation and amortization 56,027 52,522 3,505 6.7 %
Impairment charges 1,278 2,060 (782) (38.0)%
Total operating costs and expenses $ 441,103 419,414 21,689 5.2 %
Net income (loss) of equity method investments 22,351 (3,475) 25,826 n/m
Operating income $ 239,429 205,309 34,120 16.6 %
Occupancy expenses for franchised restaurants for fiscal year 2012 remained flat with the prior year as an increase in sales-
based rental expense was offset by a decline in the number of leased properties.
Cost of ice cream products declined $3.3 million, or 4.6% from the prior year, as a result of the 5.4% decline in sales of ice
cream products driven by the one-time delay in revenue recognition as a result of the change in shipping terms.
General and administrative expenses for fiscal year 2012 were impacted by an incremental legal reserve of $20.7 million
recorded upon the Canadian court’s ruling in June 2012 in the Bertico litigation, as well as $5.0 million of costs associated with
the announced closure of our ice cream manufacturing plant in Canada, consisting primarily of severance, payroll, and other
transition-related costs. General and administrative expenses for fiscal year 2012 also include $4.8 million of transaction costs
and incremental share-based compensation related to the secondary offerings and share repurchases that were completed in
April and August 2012. For fiscal year 2011, general and administrative expenses include $14.7 million related to the
termination of the Sponsor management agreement upon completion of the Company’s initial public offering ("IPO"), $1.8
million of Sponsor management fees prior to the IPO, and $2.6 million of share-based compensation expense recognized for
awards that became eligible to vest upon completion of the IPO. General and administrative expenses for fiscal year 2011 also
include transaction costs of $1.0 million and share-based compensation expense of $0.9 million related to the secondary
offering completed in November 2011.