Dunkin Brands, Inc.
DUNKIN' BRANDS GROUP, INC. (Form: 8-K, Received: 11/16/2017 16:32:15)

Washington, D.C. 20549


Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 16, 2017

(Exact name of registrant as specified in its charter)

(State or Other Jurisdiction of Incorporation)
File Number)
(IRS Employer
Identification Number)
130 Royall Street
Canton, Massachusetts 02021
(Address of registrant’s principal executive office)
(781) 737-3000
(Registrant’s telephone number)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

  Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR 230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR 240.12b-2).
Emerging Growth Company    ¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Selection 13(a) of the Exchange Act.   ¨


Item 7.01 Regulation FD Disclosure.
As previously announced, on November 16, 2017, Dunkin’ Brands Group, Inc. (the “Company”) plans to host a conference call and webinar at 4:30 p.m. ET to address the new accounting standard regarding revenue recognition that the Company will be required to adopt in 2018. The Company intends to use the presentation furnished herewith in connection with the conference and call and webinar, and may additionally use the presentation, or portions thereof, in one or more subsequent meetings with investors and analysts. The presentation will also be available online at http://investor.dunkinbrands.com as of November 16, 2017. A copy of the presentation is furnished as Exhibit 99.1 and is incorporated herein by reference.
The information contained in this report, including the exhibits attached hereto, are being furnished and shall not be deemed “filed” for any purpose, and shall not be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, regardless of any general incorporation language in any such filing.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits

Webinar Presentation

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

/s/ Katherine Jaspon
Katherine D. Jaspon
Chief Financial Officer
Date: November 16, 2017




Revenue Recognition: New Accounting Standard November 16, 2017

Forward-Looking Statements ► Certain information contained in this presentation, particularly information regarding future economic performance, finances, and expectations and objectives of management constitutes forward-looking statements. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts and generally contain words such as “believes,” “expects,” “may,” “will,” “should,” “seeks,” “approximately,” “intends,” “plans,” “estimates” or “anticipates” or similar expressions. Our forward-looking statements are subject to risks and uncertainties, which may cause actual results to differ materially from those projected or implied by the forward-looking statement. ► Forward-looking statements are based on current expectations and assumptions and currently available data and are neither predictions nor guarantees of future events or performance. You should not place undue reliance on forward-looking statements, which speak only as of the date hereof. We do not undertake to update or revise any forward- looking statements after they are made, whether as a result of new information, future events, or otherwise, except as required by applicable law. For discussion of some of the important factors that could cause these variations, please consult the “Risk Factors” section of the Company’s most recent Annual Report on Form 10-K. ► The examples provided in this presentation are meant to be illustrative only and should not be relied on as representative of any actual result in making any investment decisions. ► The information contained in this presentation is based on accounting guidance published to date and any related interpretations, which could be subject to change prior to the applicable effective date of such guidance. 2

Agenda ►Overview of new revenue recognition standard ►Key impacts to Dunkin’ Brands ►Transition timeline 3

►Global, principles-based model ►Eliminates industry-specific (i.e. franchisor) guidance ►Effective in FY2018 for December year-end companies New revenue accounting standard (ASC 606) 4

Key impacts to Dunkin’ Brands What is impacted? ►Franchise fees, including initial and renewal fees (all segments) ►Advertising fund presentation ►Certain other revenue streams (impacts generally expected to be immaterial) What is not impacted? ►Royalty income ►Rental income ►License fees, including CPG ►Expense recognition ►Cash flows of the business 5 No impact to our cash flows or how we operate our business

Franchise Fees

Franchise fees: Recognize over the franchise term 7 Current standard – recognize upfront New standard (ASC 606) – recognize over time 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 $40,000 initial fee recognized at store opening $20,000 renewal fee recognized at execution 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 $40,000 initial fee recognized over 20-year initial term @ $2,000 per year $20,000 renewal fee recognized over 10-year renewal term @ $2,000 per year Renewal recognition begins later under new standard Illustrative example: Single store with $40K initial fee (20-year initial term) and a $20K, 10-year renewal term executed in year 10

Franchise fees: Quantifying the impact New standard (ASC 606) ►Generally, each open store will generate annual franchise fee revenue (i.e. 1/20th of initial fee) 8 Current standard ► In-year franchise fee revenue is generated from store openings and renewals $41M 2016 Initial franchise fees on gross openings + Renewal of existing agreements Dunkin’ Donuts US Dunkin’ Donuts US approximately 9,000 PODs $43M 2015 YTD Sep 2017 # of open stores Average annual franchise fee revenue Total annual franchise fee revenue $13M* $18M* $1,500* revenue per store Estimated Low Range $2,000* revenue per store Estimated High Range * Unaudited estimates of expected future revenue; subject to change to to $36M

Franchise fees: Driving future revenue growth ►Franchise fee revenue growth will be driven by: ►Net development ► Potential changes to market rates over time (i.e. renewals at higher market rates) ►Consistent, recurring revenue stream into the future 9 Base Base Base Base Base Base Base Year 1 Year 2 Year 3 Year 4 Year 5 Original store base continues to provide steady revenue stream Net new stores added to revenue *$13M - $18M (under the new standard) Dunkin’ Donuts US * Unaudited estimates of expected future revenue; subject to change

Advertising Funds

Advertising funds: Consolidate results with DNKN 11 Current standard ►Revenue and expenses of advertising funds excluded from Dunkin’ Brands results Revenues: Franchise fees and royalty income Advertising fees Rental income Sales of ice cream and other products Sales at company-operated restaurants Other revenues Total revenues Operating costs and expenses: Occupancy expenses-franchised restaurants Cost of ice cream and other products Company-operated restaurant expenses Advertising expenses General and administrative expenses, net Depreciation Amortization of other intangible assets Long-lived asset impairment charges Total operating costs and expenses New standard (ASC 606) ►Consolidate advertising funds with Dunkin’ Brands results ► Gross up of revenues and expenses ►Generally, no net impact to operating income New revenue caption New expense caption Consolidation of advertising funds under new standard (ASC 606)

Advertising funds: Quantifying the impact ►FY16 franchisee contributions to U.S. advertising funds ►Advertising fund revenues and expenses will offset, except for: ► Fund in a cumulative deficit – expenses will exceed revenues ► Fund returns to a surplus – revenues will exceed expenses 12 $430M* * Includes $403M and $27M to the Dunkin’ Donuts US and Baskin-Robbins US advertising funds, respectively Advertising fees $400M Advertising expenses $401M DNKN operating income impact ($1M) Year 1 Cumulative Deficit Year 2 Return to Cumulative Surplus Example Consolidation of Advertising Funds (for illustrative purposes only) Advertising fees $420M Advertising expenses $419M DNKN operating income impact $1M

Transition Timeline

New standard (ASC 606) – Transition 14 Feb 2018 Mar 2018 Apr 2018 May 2018 Q4 2017 Earnings Presented on a current standard basis Q4 2017 Earnings Disclosure of 2016 and 2017 financial information restated for the new standard as an appendix item 2018 Guidance Provided on a new standard basis 2017 Form 10-K Footnote disclosure of 2016 and 2017 financial information restated for the new standard 2017 Form 10-K Presented on a current standard basis Q1 2018 Earnings Presented on a new standard basis Q1 2018 Form 10-Q Presented on a new standard basis Q4 2017 Reporting Q1 2018 Reporting No financial information presented under the current standard Cu rre n t St an d ar d N e w St an d ar d


Revenue Recognition: New Accounting Standard November 16, 2017