Fiscal Year Ended December 29, 2012 (52 weeks) Compared to Fiscal Year Ended December 31, 2011 (52 weeks) Total revenues. Net retail sales were $374.6 million for fiscal 2012,  compared to $387.0 million for fiscal 2011, a decrease of $12.5 million.  The components of this decrease are as follows: Revenue from international franchise fees increased to $3.6 million  for fiscal 2012 from $3.4 million for fiscal 2011, an increase of $0.2  million. This increase was primarily due to the increase in the  number of franchise locations from 79 at the end of fiscal 2011 to 91  at the end of fiscal 2012. Commercial revenue was $2.8 million in  fiscal 2012 compared to $3.9 million in fiscal 2011, a decrease of $1.2  million. This decrease was primarily due to an overall decrease in  licensing activity in 2012.  Gross margin. Total gross margin, calculated as net retail sales  and commercial revenues less cost of merchandise sold, was $147.2  million for fiscal 2012 compared to $156.8 million for fiscal 2011,  a decrease of $9.6 million, or 6.1%. Retail gross margin was $145.7  million in fiscal 2012 compared to $154.5 million in fiscal 2011, a  decrease of $8.8 million, or 5.7%. As a percentage of net retail sales,  retail gross margin decreased to 38.9% for fiscal 2012 from 39.9%  for fiscal 2011, a decrease of 100 bps. This decline in margin was  primarily attributable to decreased leverage on fixed occupancy  costs, including store asset impairment charges and decreased  merchandise margin, partially offset by cost savings in distribution  and packaging costs.  Selling, general and administrative.  Selling, general and  administrative expenses were $165.5 million for fiscal 2012 as  compared to $162.9 million for fiscal 2011, an increase of $2.6 million,  or 1.6%. As a percentage of total revenues, selling, general and  administrative expenses were 43.4% for fiscal 2012, compared to  41.3% in fiscal 2011. The dollar increase was primarily attributable to  $3 million in asset impairment charges and investment in marketing  and store-related costs as part of our long-term initiatives. Excluding  the impairment charges, selling general and administrative expenses  were 42.6% of total revenues.  22  BUILD-A-BEAR WORKSHOP, INC.  The following table sets forth a reconciliation of store contribution to  net (loss) income for our company-owned stores located in the United  States, Canada and Puerto Rico (North America), stores located in the  United Kingdom and Ireland (Europe) and for our consolidated store  base (dollars in thousands): We believe store contribution is useful to investors in evaluating our  operating performance because it, along with the number of stores in  operation, directly impacts our profitability. We use store contribution as a measure of our stores’ operating  performance. Store contribution should not be considered a  substitute for net income, net income per store, cash flows provided  by operating activities, cash flows provided by operating activities per  store, or other income or cash flow data prepared in accordance with  U.S. GAAP.  We use the term “store contribution” throughout this Annual  Report on Form 10-K. Store contribution consists of income before  income tax expense, interest, store depreciation, amortization and  impairment, goodwill impairment, general and administrative  expense, excluding franchise fees, income from licensing activities  and contribution from our web store and temporary and seasonal  locations. This term, as we define it, may not be comparable to  similarly titled measures used by other companies and is not a  measure of performance presented in accordance with U.S. generally  accepted accounting principles (GAAP).  Provision for income taxes.  Income tax expense was $0.9 million in  fiscal 2012, compared to $14.4 million for fiscal 2011. The effective  rate was (1.8)% in 2012 and (543.4)% in 2011. The fluctuation in  the effective rate was primarily attributable to the recording of a  valuation allowance in 2011 on the US deferred tax assets.  Interest expense (income), net.  Interest expense, net of interest  income, was $3,000 for fiscal 2012 as compared to $0.1 million of  income for fiscal 2011.  Goodwill impairment.  In 2012, the goodwill associated with the UK  business was fully impaired, resulting in a $33.7 million non-cash  charge. Non-GAAP Financial Measures  (dollars in millions) Fiscal 2012 Impact of store closures $ (4.8) Decrease in comparable store sales (11.6) Increase in non-comparable stores, primarily remodels  and relocations 7.1  Increase from new stores 5.0  Change in deferred revenue estimate (1.0) Decrease from non-traditional locations, including web sales (6.3) Impact of foreign currency translation (0.9) $ (12.5) 2013 FORM 10-K