Baskin Robbins 2013 Annual Report Download - page 52

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-42-
Fiscal year
2012 2011
(In thousands, except percentages)
Income before income taxes $ 162,001 66,813
Provision for income taxes 54,377 32,371
Effective tax rate 33.6% 48.5%
The reduced effective tax rate for fiscal year 2012 primarily resulted from net tax benefits of $10.2 million related to the
reversal of reserves for uncertain tax positions for which settlement with the taxing authorities was reached during the period.
Offsetting these tax benefits was $4.6 million of deferred tax expense recorded in fiscal year 2012 primarily related 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.
The higher effective tax rate for fiscal year 2011 primarily resulted from the impairment related to the Korea joint venture
investment, which reduced income before income taxes but for which there is no corresponding tax benefit, as well as enacted
increases in state tax rates that resulted in additional deferred tax expense of approximately $1.9 million.
Operating segments
Dunkin’ Donuts U.S.
Fiscal year Increase (Decrease)
2012 2011 $ %
(In thousands, except percentages)
Royalty income $ 337,170 317,203 19,967 6.3 %
Franchise fees 29,445 29,905 (460) (1.5)%
Rental income 92,049 86,590 5,459 6.3 %
Sales at company-owned restaurants 22,765 11,764 11,001 93.5 %
Other revenues 3,970 4,030 (60) (1.5)%
Total revenues $ 485,399 449,492 35,907 8.0 %
Segment profit $ 355,274 334,308 20,966 6.3 %
The increase in Dunkin’ Donuts U.S. revenues for fiscal year 2012 was primarily driven by an increase in royalty income of
$20.0 million as a result of an increase in systemwide sales, as well as an increase in sales at company-owned restaurants of
$11.0 million 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. An increase in rental income of $5.5 million also contributed to the increase in Dunkin' Donuts
U.S. revenues. Overall, Dunkin' Donuts U.S. revenues were unfavorably impacted by approximately $6.4 million as a result of
the extra week in the prior year.
The increase in Dunkin’ Donuts U.S. segment profit for fiscal year 2012 was primarily driven by the increases in royalty
income and rental income totaling $25.4 million, offset by an increase in personnel costs of $4.5 million primarily related to
continued investment in our Dunkin’ Donuts U.S. contiguous growth strategy and higher projected incentive compensation
payouts.
Dunkin’ Donuts International
Fiscal year Increase (Decrease)
2012 2011 $ %
(In thousands, except percentages)
Royalty income $ 13,474 12,657 817 6.5 %
Franchise fees 1,715 2,294 (579) (25.2)%
Rental income 179 258 (79) (30.6)%
Other revenues 117 44 73 165.9 %
Total revenues $ 15,485 15,253 232 1.5 %
Segment profit $ 9,670 11,528 (1,858) (16.1)%