Dunkin Brands, Inc.
Oct 23, 2014

Dunkin' Brands Reports Third Quarter 2014 Results

CANTON, Mass., Oct. 23, 2014 /PRNewswire/ --  

Third quarter highlights include:

  • Dunkin' Donuts U.S. comparable store sales growth of 2.0%; Baskin-Robbins U.S. comparable store sales growth of 5.8%
  • Added 197 net new restaurants worldwide including 120 net new Dunkin' Donuts in the U.S.
  • Revenue increased 3.4%
  • Adjusted operating income increased 11.3%; adjusted operating income margin of 51.6%
  • Diluted adjusted EPS increased 19.5% to $0.49
  • Board of Directors declares $0.23 fourth quarter dividend

Dunkin' Brands Group, Inc. (Nasdaq: DNKN), the parent company of Dunkin' Donuts (DD) and Baskin-Robbins (BR), today reported results for the third quarter ended September 27, 2014.

DUNKIN' BRANDS, INC. LOGO.

"Dunkin' Donuts U.S. third quarter comparable store sales growth of two percent marked a slight improvement from the second quarter as we continue to feel the impact from ongoing challenges with the economy and a highly competitive QSR breakfast and coffee environment.  In the face of these challenges, we are focused on driving balanced growth by capturing incremental beverage occasions through new product news, such as the launch of Dark Roast coffee, targeted discounting and leveraging innovation to deliver strong morning food results," said Nigel Travis, Chairman & CEO, Dunkin' Brands Group, Inc. "Franchisee restaurant level economics remain highly-compelling as demonstrated by our strong third quarter restaurant growth including the addition of 120 net new Dunkin' Donuts in the U.S. We now believe that we can ultimately have more than 17,000 Dunkin' Donuts in the U.S., an increase of 2,000 restaurants over the initial long-term growth target that we provided at the time of our IPO in 2011."

"It will be a challenge to achieve the low-end of our full-year Dunkin' Donuts U.S. comparable store sales growth target of two to three percent, but we remain confident we will achieve our other development and financial performance targets for 2014," said Paul Carbone, CFO, Dunkin' Brands Group, Inc. "Importantly, as we reaffirmed at our Investor & Analyst Day on September 17, our long-term expectations remain intact."

THIRD QUARTER 2014 KEY FINANCIAL HIGHLIGHTS

 

($ in millions, except per share data)

Three months ended

 

Increase (Decrease)

Amounts and percentages may not recalculate due to rounding

September 27,
 2014

September 28,
 2013

 

$ / #

%

Franchisee reported sales

$

2,576.3

 

2,436.7

   

139.6

 

5.7

%

Systemwide sales growth

5.7

%

5.8

%

         

Comparable store sales growth (decline):

                 

DD U.S. comparable store sales growth

2.0

%

4.2

%

         

BR U.S. comparable store sales growth

5.8

%

3.2

%

         

DD International comparable store sales decline

(2.9)

%

(1.4)

%

         

BR International comparable store sales growth (decline)

(1.5)

%

0.7

%

         

Development data1:

                 

Consolidated global net POD development

197

 

222

   

(25)

 

(11.3)

%

DD global PODs at period end

11,123

 

10,665

   

458

 

4.3

%

BR global PODs at period end

7,479

 

7,184

   

295

 

4.1

%

Consolidated global PODs at period end

18,602

 

17,849

   

753

 

4.2

%

Financial data:

                 

Revenues

$

192.6

 

186.3

   

6.3

 

3.4

%

Operating income

92.5

 

82.2

   

10.2

 

12.5

%

Operating income margin

48.0

%

44.1

%

         

Adjusted operating income2

$

99.4

 

89.3

   

10.1

 

11.3

%

Adjusted operating income margin2

51.6

%

47.9

%

         

Net income

$

54.7

 

40.2

   

14.5

 

36.0

%

Adjusted net income2

52.2

 

44.5

   

7.7

 

17.3

%

Earnings per share:

                 

Common-basic

0.52

 

0.38

   

0.14

 

36.8

%

Common-diluted

0.52

 

0.37

   

0.15

 

40.5

%

Diluted adjusted earnings per share2

0.49

 

0.41

   

0.08

 

19.5

%

Weighted average number of common shares - diluted (in millions)

106.0

 

108.2

   

(2.2)

 

(2.0)

%

 

1 Prior year POD counts have been adjusted to reflect the results of an internal POD count audit.

 

2 Adjusted operating income, adjusted operating income margin, and adjusted net income are non-GAAP measures reflecting operating income and net income adjusted for amortization of intangible assets, long-lived asset impairments, and other non-recurring, infrequent, or unusual charges, net of the tax impact of such adjustments in the case of adjusted net income. Diluted adjusted earnings per share is a non-GAAP measure calculated using adjusted net income. Please refer to "Non-GAAP Measures and Statistical Data" and "Dunkin' Brands Group, Inc. and Subsidiaries Non-GAAP Reconciliations" for further detail.

Global systemwide sales growth in the third quarter was primarily attributable to global store development and Dunkin' Donuts U.S. comparable store sales growth (which includes stores open 54 weeks or more).

Dunkin' Donuts U.S. comparable store sales growth in the third quarter was driven by higher traffic and increased average ticket resulting from our continued focus on product and marketing innovation.  Growth was driven by beverages, led by Iced Coffee, Frozen Beverages, and Hot and Iced Espresso; by breakfast sandwiches and associated add-ons like Hash Browns, led by the return of the Breakfast Burrito and the Spicy Smoked Sausage Breakfast Sandwich and the launch of the Chicken Biscuit in several markets; and by donuts including the Coffee Cream and Pumpkin flavors. Ticket and traffic growth contributed equally to comparable store sales growth in the third quarter.

Baskin-Robbins U.S. comparable store sales growth was driven by sales of Cups & Cones, Cakes, and  Beverages as a result of the program offering guests a free waffle cone with the purchase of a second scoop of ice cream, while online ice cream cake ordering continues to drive cake sales.

In the third quarter, Dunkin' Brands franchisees and licensees opened 197 net new restaurants around the globe. This includes 120 net new Dunkin' Donuts U.S. locations, 61 net new Baskin-Robbins International locations, 10 net new Dunkin' Donuts International locations, and six net new Baskin-Robbins U.S. locations. Additionally, Dunkin' Donuts U.S. franchisees remodeled 120 restaurants during the quarter.

Revenues for the third quarter increased 3.4 percent compared to the prior year period primarily from increased royalty income due to systemwide sales growth, offset by a decline in sales of ice cream products.

Operating income for the third quarter increased $10.2 million, or 12.5 percent, from the prior year period primarily as a result of the increase in revenues, as well as $3.7 million in write-downs related to our investments in the Dunkin' Donuts Spain joint venture recorded in the prior year period. Adjusted operating income increased $10.1 million, or 11.3 percent, from the third quarter of 2013 as a result of the increase in revenues and the write-downs related to the Spain joint venture recorded in the prior year period.

Net income for the third quarter increased by $14.5 million, or 36.0 percent, compared to the prior year period primarily as a result of the increase in operating income of $10.2 million and decreases in interest expense and income tax expense of $3.1 million and $1.7 million, respectively. Income tax expense was favorably impacted by the settlement of certain tax audits. Adjusted net income increased by $7.7 million, or 17.3 percent, compared to the third quarter of 2013, as a result of the increase in adjusted operating income and the decrease in interest expense, offset by an increase in income tax expense.

Diluted adjusted earnings per share increased by 19.5 percent to $0.49 for the third quarter of 2014 compared to the prior year period as a result of the increase in adjusted net income and a decrease in shares outstanding. The decrease in shares outstanding from the prior year period is due primarily to the repurchase of shares, offset by the exercise of stock options. During the third quarter, the Company repurchased a total of 1,139,000 shares.

 

THIRD QUARTER 2014 SEGMENT RESULTS

 

Amounts and percentages may not recalculate due to rounding

Three months ended

 

Increase (Decrease)

Dunkin' Donuts U.S.

September 27,
2014

 

September 28,
2013

 

$ / #

%

 

($ in thousands except as otherwise noted)

Comparable store sales growth

2.0

%

 

4.2

%

         

Systemwide sales growth

7.0

%

 

8.6

%

         

Franchisee reported sales (in millions)

$

1,840.5

   

1,719.5

   

121.0

 

7.0

%

                       

Revenues:

                   

Royalty income

$

99,758

   

92,838

   

6,920

 

7.5

%

Franchise fees

11,704

   

9,592

   

2,112

 

22.0

%

Rental income

24,610

   

24,455

   

155

 

0.6

%

Sales at company-owned restaurants

5,267

   

6,250

   

(983)

 

(15.7)

%

Other revenues

1,612

   

1,119

   

493

 

44.1

%

Total revenues

$

142,951

   

134,254

   

8,697

 

6.5

%

                       

Segment profit1

$

106,242

   

97,109

   

9,133

 

9.4

%

                       

Points of distribution

7,941

   

7,528

   

413

 

5.5

%

Gross openings

141

   

107

   

34

 

31.8

%

Net openings

120

   

81

   

39

 

48.1

%

1 Prior year amounts reflect change in segment profit measure. Please refer to "Segment Profit Comparability" for further detail.

Dunkin' Donuts U.S. revenues of $143.0 million represented an increase of 6.5 percent year-over-year.  The increase was primarily a result of increased royalty income, as well as franchise fees due primarily to the timing of franchise renewals and an increase in development year-over-year. The increases were offset by a decline in sales at company-owned restaurants due to the sale of all company-owned restaurants in the Atlanta market in the second quarter of 2014.

Dunkin' Donuts U.S. segment profit in the third quarter increased $9.1 million over the prior year period to $106.2 million, which was driven primarily by the increases in royalty income and franchise fees, offset by an increase in personnel costs.

 

Amounts and percentages may not recalculate due to rounding

Three months ended

 

Increase (Decrease)

Dunkin' Donuts International

September 27,
2014

 

September 28,
2013

 

$ / #

%

 

($ in thousands except as otherwise noted)

Comparable store sales decline

(2.9)

%

 

(1.4)

%

         

Systemwide sales growth

4.3

%

 

1.4

%

         

Franchisee reported sales (in millions)

$

172.8

   

165.8

   

7.1

 

4.3

%

                     

Revenues:

                   

Royalty income

$

3,685

   

3,342

   

343

 

10.3

%

Franchise fees

683

   

770

   

(87)

 

(11.3)

%

Rental income

18

   

37

   

(19)

 

(51.4)

%

Other revenues

(14)

   

25

   

(39)

 

n/m

Total revenues

$

4,372

   

4,174

   

198

 

4.7

%

                     

Segment profit (loss)1

$

1,885

   

(1,059)

   

2,944

 

n/m

                     

Points of distribution2

3,182

   

3,137

   

45

 

1.4

%

Gross openings

88

   

128

   

(40)

 

(31.3)

%

Net openings

10

   

67

   

(57)

 

(85.1)

%

1 Prior year amounts reflect change in segment profit measure. Please refer to "Segment Profit Comparability" for further detail.

2 Prior year POD counts have been adjusted to reflect the results of an internal POD count audit.

Dunkin' Donuts International third quarter systemwide sales increased 4.3 percent from the prior year period, driven by sales growth in Germany, Spain, and the Philippines, offset by a decline in South Korea. The decline in South Korea was partially offset by favorable foreign exchange. On a constant currency basis, systemwide sales increased by approximately 1 percent.

Dunkin' Donuts International third quarter revenues of $4.4 million represented an increase of 4.7 percent year-over-year. The increase in revenue was primarily a result of an increase in royalty income, offset by a decline in franchise fees.

Segment profit for Dunkin' Donuts International increased $2.9 million to $1.9 million, primarily due to $3.7 million in write-downs related to our investments in the Dunkin' Donuts Spain joint venture recorded in the prior year period, as well as revenue growth, offset by additional investments in marketing.

 

Amounts and percentages may not recalculate due to rounding

Three months ended

 

Increase (Decrease)

Baskin-Robbins U.S.

September 27,
2014

 

September 28,
2013

 

$ / #

%

 

($ in thousands except as otherwise noted)

Comparable store sales growth

5.8

%

 

3.2

%

         

Systemwide sales growth

5.9

%

 

4.2

%

         

Franchisee reported sales (in millions)

$

161.0

   

152.2

   

8.8

 

5.8

%

                     

Revenues:

                   

Royalty income

$

7,991

   

7,595

   

396

 

5.2

%

Franchise fees

360

   

305

   

55

 

18.0

%

Rental income

795

   

802

   

(7)

 

(0.9)

%

Sales of ice cream products

1,177

   

986

   

191

 

19.4

%

Other revenues

2,293

   

2,211

   

82

 

3.7

%

Total revenues

$

12,616

   

11,899

   

717

 

6.0

%

                     

Segment profit1

$

8,828

   

8,215

   

613

 

7.5

%

                     

Points of distribution

2,486

   

2,471

   

15

 

0.6

%

Gross openings

21

   

20

   

1

 

5.0

%

Net openings

6

   

1

   

5

 

500.0

%

1 Prior year amounts reflect change in segment profit measure. Please refer to "Segment Profit Comparability" for further detail.

Baskin-Robbins U.S. third quarter revenue increased 6.0 percent from the prior year period to $12.6 million due primarily to increases in royalty income and sales of ice cream products.

Segment profit for Baskin-Robbins U.S. increased 7.5 percent year-over-year to $8.8 million primarily as a result of the increase in revenues and a reduction in personnel costs.

 

Amounts and percentages may not recalculate due to rounding

Three months ended

 

Increase (Decrease)

Baskin-Robbins International

September 27,
2014

 

September 28,
2013

 

$ / #

%

 

($ in thousands except as otherwise noted)

Comparable store sales growth (decline)

(1.5)

%

 

0.7

%

         

Systemwide sales growth (decline)

0.7

%

 

(2.6)

%

         

Franchisee reported sales (in millions)

$

401.9

   

399.2

   

2.7

 

0.7

%

                     

Revenues:

                   

Royalty income

$

2,180

   

2,552

   

(372)

 

(14.6)

%

Franchise fees

398

   

492

   

(94)

 

(19.1)

%

Rental income

126

   

124

   

2

 

1.6

%

Sales of ice cream products

26,166

   

29,439

   

(3,273)

 

(11.1)

%

Other revenues

33

   

152

   

(119)

 

(78.3)

%

Total revenues

$

28,903

   

32,759

   

(3,856)

 

(11.8)

%

                     

Segment profit1

$

12,485

   

16,775

   

(4,290)

 

(25.6)

%

                     

Points of distribution2

4,993

   

4,713

   

280

 

5.9

%

Gross openings

116

   

107

   

9

 

8.4

%

Net openings

61

   

73

   

(12)

 

(16.4)

%

1 Prior year amounts reflect change in segment profit measure. Please refer to "Segment Profit Comparability" for further detail.

2 Prior year POD counts have been adjusted to reflect the results of an internal POD count audit.

Baskin-Robbins International systemwide sales increased 0.7 percent from the prior year period driven by favorable foreign exchange and an increase in sales in South Korea, offset by unfavorable foreign exchange and a decrease in sales in Japan. On a constant currency basis, systemwide sales declined slightly from the prior year period.

Baskin-Robbins International third quarter revenues decreased 11.8 percent from the prior year period to $28.9 million due primarily to a decline in sales of ice cream products as well as a decline in royalty income.

Third quarter segment profit decreased 25.6 percent from the prior year period to $12.5 million due primarily to a decrease in net margin on ice cream due to the decline in sales of ice cream products, as well as a decrease in income from our Japan and South Korea joint ventures.

COMPANY UPDATES

  • The Company today announced that the Board of Directors declared a fourth quarter cash dividend of $0.23 per share, payable on December 3, 2014 to shareholders of record as of the close of business on November 24, 2014.

 

LONG-TERM EARNINGS TARGETS

  • U.S. consolidated comps in the 2 - 4% range
  • Total net unit development of approximately 4 - 6% with opportunity to accelerate
  • 6 - 8% revenue growth
  • 10 - 12% adjusted operating income growth
  • Adjusted operating income margin expansion of 150 - 200 basis points per year
  • 15%+ diluted adjusted EPS growth

Conference Call

As previously announced, Dunkin' Brands will be holding a conference call today at 8:00 am ET hosted by Nigel Travis, Chairman & Chief Executive Officer, and Paul Carbone, Chief Financial Officer. The dial-in number is (866) 393-1607 or (914) 495-8556, conference number 17859401.  Dunkin' Brands will broadcast the conference call live over the Internet at http://investor.dunkinbrands.com. A replay of the conference call will be available on the Company's website at http://investor.dunkinbrands.com.

The Company's consolidated statements of operations, condensed consolidated balance sheets, condensed consolidated statements of cash flows and other additional information have been provided with this press release. This information should be reviewed in conjunction with this press release.

Forward-Looking Statements

Certain statements contained herein are not based on historical fact and are "forward-looking statements" within the meaning of the applicable securities laws and regulations.  Generally, these statements can be identified by the use of words such as "anticipate," "believe," "could," "estimate," "expect," "feel," "forecast," "intend," "may," "plan," "potential," "project," "should," "would," and similar expressions intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words.   By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future.  These risk and uncertainties include, but are not limited to: the ongoing level of profitability of franchisees and licensees; our franchisees' and licensees' ability to sustain same store sales growth; successful westward expansion; changes in working relationships with our franchisees and licensees and the actions of our franchisees and licensees; our master franchisees' relationships with sub-franchisees; the strength of our brand in the markets in which we compete; changes in competition within the quick-service restaurant segment of the food industry; changes in consumer behavior resulting from changes in technologies or alternative methods of delivery; economic and political conditions in the countries where we operate; our substantial indebtedness; our ability to protect our intellectual property rights; consumer preferences, spending patterns and demographic trends; the impact of seasonal changes, including weather effects, on our business; the success of our growth strategy and international development; changes in commodity and food prices, particularly coffee, dairy products and sugar, and other operating costs; shortages of coffee; failure of our network and information technology systems; interruptions or shortages in the supply of products to our franchisees and licensees; the impact of food borne-illness or food safety issues or adverse public or media opinions regarding the health effects of consuming our products; our ability to collect royalty payments from our franchisees and licensees; the ability of our franchisees and licensees to open new restaurants and keep existing restaurants in operation; our ability to retain key personnel; any inability to protect consumer credit card data and catastrophic events.

Forward-looking statements reflect management's analysis as of the date of this press release.  Important factors that could cause actual results to differ materially from our expectations are more fully described in our other filings with the Securities and Exchange Commission, including under the section headed "Risk Factors" in our most recent annual report on Form 10-K. Except as required by applicable law, we do not undertake to publicly update or revise any of these forward-looking statements, whether as a result of new information, future events or otherwise.

Non-GAAP Measures and Statistical Data

In addition to the GAAP financial measures set forth in this press release, the Company has included certain non-GAAP measurements, adjusted operating income, adjusted operating income margin, adjusted net income, and diluted adjusted earnings per share, which present operating results on a basis adjusted for certain items. The Company uses these non-GAAP measures as key performance measures for the purpose of evaluating performance internally. We also believe these non-GAAP measures provide our investors with useful information regarding our historical operating results. These non-GAAP measures are not intended to replace the presentation of our financial results in accordance with GAAP. Use of the terms adjusted operating income, adjusted operating income margin, adjusted net income, and diluted adjusted earnings per share may differ from similar measures reported by other companies. These non-GAAP measures are reconciled from the respective measures determined under GAAP in the attached table "Dunkin' Brands Group, Inc. and Subsidiaries Non-GAAP Reconciliations."

Additionally, the Company has included metrics such as systemwide sales growth and comparable store sales growth, which are commonly used statistical measures in the quick service restaurant industry and the Company believes are important to understanding the Company's performance.

The Company uses "systemwide sales growth" to refer to the percentage change in sales at both franchisee- and company-owned restaurants from the comparable period of the prior year. Changes in systemwide sales are driven by changes in comparable store sales and changes in the number of restaurants.

The Company uses "DD U.S. comparable store sales growth," "BR U.S. comparable store sales growth," "DD International comparable store sales growth," and "BR International comparable store sales growth," which are calculated by including only sales from franchisee- and company-owned restaurants that have been open at least 54 weeks and that have reported sales in the current and comparable prior year week.

Segment Profit Comparability

Beginning in fiscal year 2014, the key measure used by the Company to assess the performance of and allocate resources to each reportable segment, referred to as segment profit, was revised to better align the segments with our consolidated performance measures and incentive targets. As a result, segment profit now reflects operating income adjusted for amortization of intangible assets, long-lived asset impairments, and other non-recurring, infrequent, or unusual charges, and does not reflect the allocation of any corporate charges. Prior to fiscal year 2014, segment profit was measured based on earnings before interest, taxes, depreciation, amortization, impairment charges, loss on debt extinguishment and refinancing transactions, other gains and losses, and unallocated corporate charges. The segment profit amounts included herein for the three months ended September 28, 2013 have been restated to reflect this change to the measurement of segment profit to enable comparability with the three months ended September 27, 2014.

About Dunkin' Brands Group, Inc.

With more than 18,000 points of distribution in nearly 60 countries worldwide, Dunkin' Brands Group, Inc. (Nasdaq: DNKN) is one of the world's leading franchisors of quick service restaurants (QSR) serving hot and cold coffee and baked goods, as well as hard-serve ice cream. At the end of fiscal 2013, Dunkin' Brands nearly 100 percent franchised business model included nearly 11,000 Dunkin' Donuts restaurants and 7,300 Baskin-Robbins restaurants, which are primarily owned and operated by approximately 2,000 franchisees, licensees and joint venture partners. For the full-year 2013, the Company had franchisee-reported sales of approximately $9.3 billionDunkin' Brands Group, Inc. is headquartered in Canton, Mass.

 

 

DUNKIN' BRANDS GROUP, INC. AND SUBSIDIARIES

Consolidated Statements of Operations

(In thousands, except per share data)

(Unaudited)

 
 

Three months ended

 

Nine months ended

 

September 27,
2014

 

September 28,
2013

 

September 27,
2014

 

September 28,
2013

                       

Revenues:

                     

Franchise fees and royalty income

$

126,759

   

117,486

   

355,738

   

334,045

 

Rental income

25,570

   

25,437

   

73,650

   

72,924

 

Sales of ice cream products

27,357

   

30,429

   

88,072

   

86,818

 

Sales at company-owned restaurants

5,267

   

6,250

   

16,319

   

18,261

 

Other revenues

7,687

   

6,715

   

21,717

   

18,615

 

Total revenues

192,640

   

186,317

   

555,496

   

530,663

 

Operating costs and expenses:

                     

Occupancy expenses—franchised restaurants

13,258

   

13,445

   

39,830

   

39,041

 

Cost of ice cream products

19,530

   

20,899

   

62,273

   

61,187

 

Company-owned restaurant expenses

5,505

   

6,222

   

16,772

   

17,817

 

General and administrative expenses, net(a)(b)

56,311

   

58,454

   

172,406

   

177,009

 

Depreciation

4,960

   

5,591

   

14,803

   

16,961

 

Amortization of other intangible assets

6,333

   

6,938

   

19,122

   

20,085

 

Long-lived asset impairment charges

633

   

92

   

1,279

   

447

 

Total operating costs and expenses

106,530

   

111,641

   

326,485

   

332,547

 

 Net income of equity method investments:

                     

Net income, excluding impairment

5,366

   

8,201

   

12,514

   

16,070

 

Impairment charge©

   

(873)

   

   

(873)

 

   Net income of equity method investments

5,366

   

7,328

   

12,514

   

15,197

 

Other operating income, net(a)

1,004

   

233

   

7,609

   

9,188

 

        Operating income

92,480

   

82,237

   

249,134

   

222,501

 

Other income (expense):

                     

Interest income

63

   

105

   

201

   

310

 

Interest expense

(16,680)

   

(19,805)

   

(51,444)

   

(60,523)

 

Loss on debt extinguishment and refinancing transactions

   

   

(13,735)

   

(5,018)

 

Other gains (losses), net

(584)

   

12

   

(670)

   

(1,191)

 

Total other expense

(17,201)

   

(19,688)

   

(65,648)

   

(66,422)

 

Income before income taxes

75,279

   

62,549

   

183,486

   

156,079

 

Provision for income taxes

20,855

   

22,505

   

60,263

   

51,664

 

Net income including noncontrolling interests

54,424

   

40,044

   

123,223

   

104,415

 

Net loss attributable to noncontrolling interests

(273)

   

(177)

   

(621)

   

(416)

 

Net income attributable to Dunkin' Brands

$

54,697

   

40,221

   

123,844

   

104,831

 
                       

Earnings per share—basic

$

0.52

   

0.38

   

1.17

   

0.99

 

Earnings per share—diluted

0.52

   

0.37

   

1.16

   

0.97

 
   

(a) 

Amounts for the three and nine months ended September 28, 2013 have been revised to conform to the current period presentation.

(b) 

Amounts for the three and nine months ended September 28, 2013 include $2.8 million of reserves on accounts and notes receivable from our Dunkin' Donuts Spain joint venture.

© 

Represents an impairment of the full carrying value of our investment in Dunkin' Donuts Spain joint venture.

 

 

 

DUNKIN' BRANDS GROUP, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(In thousands)

(Unaudited)

 
   

September 27,
2014

 

December 28,
2013

Assets

           

Current assets:

           

Cash and cash equivalents

 

$

155,665

   

256,933

 

Accounts, notes, and other receivables, net

 

62,146

   

79,765

 

Other current assets

 

114,051

   

125,062

 

Total current assets

 

331,862

   

461,760

 

Property and equipment, net

 

179,073

   

182,858

 

Equity method investments

 

174,129

   

170,644

 

Goodwill and other intangible assets, net

 

2,323,036

   

2,343,803

 

Other assets

 

67,021

   

75,625

 

Total assets

 

$

3,075,121

   

3,234,690

 

Liabilities, Redeemable Noncontrolling Interests, and Stockholders' Equity

           

Current liabilities:

           

Current portion of long-term debt

 

$

625

   

5,000

 

Accounts payable

 

12,112

   

12,445

 

Other current liabilities

 

256,097

   

326,853

 

Total current liabilities

 

268,834

   

344,298

 

Long-term debt, net

 

1,808,491

   

1,818,609

 

Deferred income taxes, net

 

547,606

   

561,714

 

Other long-term liabilities

 

95,646

   

97,781

 

Total long-term liabilities

 

2,451,743

   

2,478,104

 

Redeemable noncontrolling interests

 

7,164

   

4,930

 

Total stockholders' equity

 

347,380

   

407,358

 

Total liabilities, redeemable noncontrolling interests, and stockholders' equity

 

$

3,075,121

   

3,234,690

 

 

 

DUNKIN' BRANDS GROUP, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

 
   

Nine months ended

   

September 27,
2014

 

September 28,
2013

             

Net cash provided by operating activities

 

$

115,851

   

65,315

 

Cash flows from investing activities:

           

Additions to property and equipment

 

(18,324)

   

(20,930)

 

Proceeds from sale of joint venture

 

   

7,200

 

Proceeds from sale of real estate and company-owned restaurants

 

14,354

   

2,776

 

Other, net

 

(1,734)

   

(2,021)

 

Net cash used in investing activities

 

(5,704)

   

(12,975)

 

Cash flows from financing activities:

           

Repayment of long-term debt

 

(15,000)

   

(19,157)

 

Payment of deferred financing and other debt-related costs

 

(8,977)

   

(6,157)

 

Dividends paid on common stock

 

(72,756)

   

(60,707)

 

Repurchases of common stock

 

(130,171)

   

(17,190)

 

Exercise of stock options

 

4,847

   

6,287

 

Other, net

 

10,861

   

1,906

 

Net cash used in financing activities

 

(211,196)

   

(95,018)

 

Effect of exchange rates on cash and cash equivalents

 

(219)

   

(140)

 

Decrease in cash and cash equivalents

 

(101,268)

   

(42,818)

 

Cash and cash equivalents, beginning of period

 

256,933

   

252,618

 

Cash and cash equivalents, end of period

 

$

155,665

   

209,800

 

 

 

DUNKIN' BRANDS GROUP, INC. AND SUBSIDIARIES

Non-GAAP Reconciliations

(In thousands, except share and per share data)

(Unaudited)

 
 

Three months ended

 

Nine months ended

 

September 27,
2014

 

September 28,
2013

 

September 27,
2014

 

September 28,
2013

Operating income

$

92,480

   

82,237

   

249,134

   

222,501

 

Operating income margin

48.0

%

 

44.1

%

 

44.8

%

 

41.9

%

Adjustments:

                     

Amortization of other intangible assets

$

6,333

   

6,938

   

19,122

   

20,085

 

Long-lived asset impairment charges

633

   

92

   

1,279

   

447

 

Third-party product volume guarantee

   

   

(300)

   

7,500

 

Peterborough plant closure(a)

   

66

   

   

654

 

Adjusted operating income

$

99,446

   

89,333

   

269,235

   

251,187

 

Adjusted operating income margin

51.6

%

 

47.9

%

 

48.5

%

 

47.3

%

                       

Net income attributable to Dunkin' Brands

$

54,697

   

40,221

   

123,844

   

104,831

 

Adjustments:

                     

Amortization of other intangible assets

6,333

   

6,938

   

19,122

   

20,085

 

Long-lived asset impairment charges

633

   

92

   

1,279

   

447

 

Third-party product volume guarantee

   

   

(300)

   

7,500

 

Peterborough plant closure(a)

   

66

   

   

654

 

Loss on debt extinguishment and refinancing transactions

   

   

13,735

   

5,018

 

Tax impact of adjustments(b)

(2,786)

   

(2,838)

   

(13,534)

   

(13,481)

 

Income tax audit settlements©

(6,717)

   

   

(6,717)

   

(8,417)

 

State tax apportionment(d)

   

   

514

   

2,868

 

Adjusted net income

$

52,160

   

44,479

   

137,943

   

119,505

 
                       

Adjusted net income

$

52,160

   

44,479

   

137,943

   

119,505

 

Weighted average number of common shares - diluted

105,969,110

   

108,164,925

   

107,045,211

   

108,178,632

 

Diluted adjusted earnings per share

$

0.49

   

0.41

   

1.29

   

1.10

 
                       

(a) For the three and nine months ended September 28, 2013, the adjustments represent transition-related general and administrative costs incurred related to the closure of the Baskin-Robbins ice cream manufacturing plant in Peterborough, Canada, such as information technology integration, project management, and transportation costs.

(b) Tax impact of adjustments calculated at a 40% effective tax rate.

© Represents income tax benefits resulting from the resolution of historical tax positions settled during the period.

(d) Represents tax expense recognized due to an increase in our overall state tax rate for a shift in the apportionment of income to certain state jurisdictions.

 

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SOURCE Dunkin' Brands Group, Inc.

 

 

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