Dunkin' Donuts 2011 Annual Report Download - page 57

fiscal year. The converted Class L shares are already included in the weighted average number of common
shares outstanding for the period after their conversion.
(2) Represents the dilutive effect of restricted shares and stock options, using the treasury stock method.
Results of operations
Fiscal year 2011 compared to fiscal year 2010
Consolidated results of operations
Fiscal year
2010
Fiscal year
2011
Increase (Decrease)
$ %
(In thousands, except percentages)
Franchise fees and royalty income ................... $359,927 398,474 38,547 10.7%
Rental income ................................... 91,102 92,145 1,043 1.1%
Sales of ice cream products ......................... 84,989 100,068 15,079 17.7%
Other revenues ................................... 41,117 37,511 (3,606) (8.8)%
Total revenues ............................... $577,135 628,198 51,063 8.8%
The increase in total revenues for fiscal year 2011 of $51.1 million was driven by an increase in royalty income
of $30.7 million, or 9.2%, mainly as a result of Dunkin’ Donuts U.S. systemwide sales growth, and a $6.8 million
increase in franchise renewal income. Sales of ice cream products also increased $15.1 million, or 17.7%, driven
by strong sales in the Middle East and Australia, a December 2010 price increase that was implemented to offset
higher commodity costs, and an additional week of sales in fiscal year 2011. These increases in revenue were
offset by a decrease in other revenues of $3.6 million primarily as a result of a decline in the average number of
company-owned stores held during fiscal year 2011. Approximately $8.0 million of the increase in total revenues
was attributable to the extra week in fiscal year 2011, consisting primarily of additional royalty income and sales
of ice cream products.
Fiscal year
2010
Fiscal year
2011
Increase (Decrease)
$ %
(In thousands, except percentages)
Occupancy expenses – franchised restaurants ........ $ 53,739 51,878 (1,861) (3.5)%
Cost of ice cream products ....................... 59,175 72,329 13,154 22.2%
General and administrative expenses, net ............ 223,620 240,625 17,005 7.6%
Depreciation and amortization .................... 57,826 52,522 (5,304) (9.2)%
Impairment charges ............................ 7,075 2,060 (5,015) (70.9)%
Total operating costs and expenses ............. $401,435 419,414 17,979 4.5%
Equity in net income (loss) of joint ventures ......... 17,825 (3,475) (21,300) (119.5)%
Operating income .......................... $193,525 205,309 11,784 6.1%
Occupancy expenses for franchised restaurants for fiscal year 2011 decreased $1.9 million resulting primarily
from additional lease reserves recorded in the prior year and a decline in the number of leased properties. Cost of
ice cream products increased 22.2% from the prior year, as compared to a 17.7% increase in sales of ice cream
products, resulting from unfavorable commodity prices and foreign exchange, slightly offset by increases in
selling prices.
General and administrative expenses for fiscal year 2011 includes certain expenses related to our initial public
offering completed in August 2011 and a secondary offering completed in December 2011. Upon completion of
the initial public offering, the Sponsor management agreement was terminated resulting in a $13.4 million
increase in management fees, consisting of a $14.7 million expense incurred upon termination offset by no longer
incurring the $3.0 million annual management fee expense post-termination. Additionally, $2.6 million of share-
-47-