Segment Information

3 Months Ended

Mar. 28, 2020

Segment information

The Company is strategically aligned into two global brands, Dunkin’ and Baskin-Robbins, which are further segregated between U.S. operations and international operations. Additionally, the Company administers and directs the development of all advertising and promotional programs in the U.S. As such, the Company has determined that it has five reportable segments: Dunkin’ U.S., Baskin-Robbins U.S., Dunkin’ International, Baskin-Robbins International, and U.S. Advertising Funds. Dunkin’ U.S., Baskin-Robbins U.S., and Dunkin’ International primarily derive their revenues through royalty income and franchise fees. Baskin-Robbins U.S. also derives revenue through license fees from a third-party license agreement and rental income. Dunkin’ U.S. also derives revenue through rental income. Baskin-Robbins International primarily derives its revenues from sales of ice cream products, as well as royalty income and franchise fees. U.S. Advertising Funds primarily derive revenues through continuing advertising fees from Dunkin’ and Baskin-Robbins franchisees. 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. Senior management primarily evaluates the performance of its segments and allocates resources to them based on operating income adjusted for amortization of intangible assets, long-lived asset impairment charges, and certain non-recurring, infrequent or unusual charges, which does not reflect the allocation of any corporate charges. This profitability measure is 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 generally consistent with those used in the consolidated financial statements.

Revenues for all operating segments include only transactions with unaffiliated customers and include no intersegment revenues. Revenues reported as “Other” include revenues earned through certain licensing arrangements with third parties in which our brand names are used, including the licensing fees earned from the Dunkin’ K-Cup® pod licensing agreement and sales of Dunkin’ branded ready-to-drink bottled iced coffee and retail packaged coffee, revenues generated from online training programs for franchisees, advertising fees and related income from international advertising funds, and breakage and other revenue related to the gift card program, all of which are not allocated to a specific segment. Revenues by segment were as follows (in thousands):



	Revenues
	Three months ended
	March 28, 2020		March 30, 2019
Dunkin’ U.S.	$	151,790	149,745
Baskin-Robbins U.S.	10,844		10,277
Dunkin’ International	5,483		6,851
Baskin-Robbins International	27,302		25,579
U.S. Advertising Funds	108,631		108,642
Total reportable segment revenues	304,050		301,094
Other	19,094		17,997
Total revenues	$	323,144	319,091

Amounts included in “Corporate and other” in the segment profit table below include corporate overhead costs, such as payroll and related benefit costs and professional services, net of “Other” revenues reported above. Segment profit by segment was as follows (in thousands):



	Segment profit
	Three months ended
	March 28, 2020			March 30, 2019
Dunkin’ U.S.	$	109,306		111,034
Baskin-Robbins U.S.	6,609			6,323
Dunkin’ International	3,491			4,831
Baskin-Robbins International	9,448			7,802
U.S. Advertising Funds	—			—
Total reportable segments	128,854			129,990
Corporate and other	(22,876		)	(23,662	)
Interest expense, net	(29,982		)	(30,298	)
Amortization of other intangible assets	(4,592		)	(4,633	)
Long-lived asset impairment charges	(74		)	(323	)
Other loss, net	(670		)	(4	)
Income before income taxes	$	70,660		71,070

Net income of equity method investments is included in segment profit for the Dunkin’ International and Baskin-Robbins International reportable segments. Amounts reported as “Other” in the table below include the reduction in depreciation and amortization, net of tax, reported by our equity method investees as a result of previously recorded impairment charges. Net income of equity method investments by reportable segment was as follows (in thousands):



	Net income (loss) of equity method investments
	Three months ended
	March 28, 2020			March 30, 2019
Dunkin’ International	$	(125	)	(140	)
Baskin-Robbins International	3,407			1,717
Total reportable segments	3,282			1,577
Other	384			653
Total net income of equity method investments	$	3,666		2,230