DUNKIN' BRANDS GROUP, INC. - FORM 8-K - EX-99.1 - PRESS RELEASE

Attached files

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8-K - 8-K - DUNKIN' BRANDS GROUP, INC.	earningsrelease8ksept2013.htm
EX-99.2 - PRESS RELEASE - DUNKIN' BRANDS GROUP, INC.	dnkn-ex992_20130928xpr.htm

Exhibit 99.1

Dunkin' Brands Reports Third Quarter 2013 Results

Third quarter highlights include:


•	Dunkin' Donuts U.S. comparable store sales growth of 4.2%


•	Added 222 net new restaurants worldwide including 81 net new Dunkin' Donuts in the U.S.


•	Adjusted operating income increased 4.6%


•	Adjusted operating income margin of 47.9%


•	Diluted adjusted EPS increased 10.8% to $0.41


•	Company records $3.7 million in write-downs related to its investments in Dunkin' Donuts Spain joint venture

CANTON, Mass. (October 24, 2013) - 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 28, 2013.

"Both Dunkin’ Donuts and Baskin Robbins U.S. continue to have excellent momentum and delivered another quarter of strong comparable store sales and net new restaurant growth," said Nigel Travis, Chairman and Chief Executive Officer, Dunkin' Brands Group, Inc. “With 222 net new openings year-to-date, we now have 7,500 Dunkin’ Donuts restaurants in the U.S and the demand by existing and prospective franchisees to grow with us has never been stronger. We continue to believe that we can have 15,000 Dunkin’ Donuts restaurants in the U.S., including approximately an additional 3,000 east of the Mississippi and 5,000 in the western part of the country. Notably this quarter, we opened our first restaurants in Denver, Colorado, and sold additional store development agreements in Southern California bringing the total to 70 restaurants planned for the Southern California region. Additionally, just last week we announced that we have begun to sell store development agreements for the central part of the state, including the Fresno, Bakersfield, Sacramento, and Santa Barbara areas."

“We had another strong quarterly performance with nearly 9 percent revenue growth, nearly 48 percent adjusted operating income margin, and double-digit adjusted earnings per share growth,” said Paul Carbone, Chief Financial Officer, Dunkin' Brands Group, Inc. "Based on our ongoing strong performance, we feel confident in our ability to deliver on our full-year comparable store sales and net development growth targets. Because of the impact of write-downs related to our prior investments in the Dunkin’ Donuts joint venture in Spain, we believe we will be at the low-end of our $1.50 to $1.53 diluted adjusted earnings per share target for 2013.”

THIRD QUARTER 2013 KEY FINANCIAL HIGHLIGHTS



($ in millions, except per share data)	Three months ended					Increase (Decrease)
	September 28, 2013			September 29, 2012		$ / #		%
Franchisee reported sales	$	2,436.7		2,302.4		134.3		5.8	%
Systemwide sales growth	5.8		%	4.7	%
Comparable store sales growth (decline):
DD U.S. comparable store sales growth	4.2		%	2.8	%
BR U.S. comparable store sales growth	3.2		%	1.1	%
DD International comparable store sales growth (decline)	(1.4		)%	2.1	%
BR International comparable store sales growth	0.7		%	3.0	%
Development data:
Consolidated global net POD development	222			187		35		18.7	%
DD global PODs at period end	10,795			10,283		512		5.0	%
BR global PODs at period end	7,145			6,920		225		3.3	%
Consolidated global PODs at period end	17,940			17,203		737		4.3	%
Financial data:
Revenues	$	186.3		171.7		14.6		8.5	%
Operating income	82.2			70.3		11.9		16.9	%
Operating income margin	44.1		%	41.0	%
Adjusted operating income¹	$	89.3		85.4		3.9		4.6	%
Adjusted operating income margin¹	47.9		%	49.7	%
Net income	$	40.2		29.5		10.7		36.2	%
Adjusted net income¹	44.5			42.1		2.4		5.6	%
Earnings per share:
Common–basic	0.38			0.26		0.12		46.2	%
Common–diluted	0.37			0.26		0.11		42.3	%
Diluted adjusted earnings per share¹	0.41			0.37		0.04		10.8	%
Weighted average number of common shares – diluted (in millions)	108.2			115.1		(6.9	)	(6.0	)%
(amounts and percentages may not recalculate due to rounding)

¹ 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. 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 increased average ticket and higher traffic resulting from our continued product and marketing innovation. This includes strong beverage growth, led by cold beverages and hot and iced espresso driven by the continuation of Iced Coffee flavors inspired by Baskin-Robbins Ice Cream as well as the introduction of Caramel and the return of Pumpkin across the beverage portfolio; continued breakfast sandwich momentum highlighted by the limited time offer Hot & Spicy Breakfast Sandwich and incremental gains in the Turkey Sausage Breakfast Sandwich; growth in donut sales led by the introduction of Lemonade, Key Lime and Pumpkin Pie flavors as well as bulk offers in select markets; and growth in afternoon products including the limited time offer Pretzel Roll Roast Beef Sandwich and incremental gains in Chicken and Tuna Salad Wraps and Chicken Sandwiches.

Baskin-Robbins U.S. comparable store sales growth was driven by sales of Cups, Cones and Beverages led by news around Flavors of the Month, OREO® n' Chocolate and OREO® Nutty Salted Caramel; increased sales of cakes; and take-home ice cream quarts.

In the third quarter, Dunkin' Brands franchisees and licensees opened 222 net new restaurants around the globe. This includes 81 net new Dunkin' Donuts U.S. locations, 73 net new Baskin-Robbins International locations, 67 net new Dunkin' Donuts International locations, and one net new Baskin-Robbins U.S. location. Additionally, Dunkin' Donuts U.S. franchisees remodeled 98 restaurants during the quarter.

Revenues for the third quarter increased 8.5 percent compared to the prior year primarily from increased royalty income due to the increase in systemwide sales, increased franchise fees due to favorable development mix and incremental franchise renewals, and increased sales of ice cream products.

Operating income for the third quarter increased $11.9 million, or 16.9 percent, from the prior year primarily as a result of the increases in royalty income and franchise fees, as well as the impact of the additional depreciation and costs incurred in the prior year related to the closure of our ice cream manufacturing plant in Canada. The increases were offset by $3.7 million in write-downs related to our investments in the Dunkin' Donuts Spain joint venture². Adjusted operating income increased $3.9 million, or 4.6 percent, from the third quarter of 2012 as a result of the increases in royalty income and franchise fees, offset by the write-downs related to the Spain joint venture and incremental general and administrative costs.

Net income for the third quarter increased by $10.7 million, or 36.2 percent, compared to the prior year primarily as a result of the $11.9 million increase in operating income as well as the $4.0 million loss on debt extinguishment and refinancing transactions incurred in the third quarter of 2012, offset by a $4.5 million increase in income tax expense and a $0.9 million increase in interest expense. Adjusted net income increased by $2.4 million, or 5.6 percent, compared to the third quarter of 2012, as a result of the increase in adjusted operating income, offset by increases in interest expense and income tax expense.

Diluted adjusted earnings per share increased by 10.8 percent to $0.41 for the third quarter of 2013, as a result of the increase in adjusted net income, as well as a decline in shares outstanding due to the repurchase of 15 million shares in August 2012 and approximately 400,000 shares repurchased under previous authorizations during 2013.

²See the attached consolidated statements of operations for further information regarding the $3.7 million in write-downs related to our investments in the Dunkin' Donuts Spain joint venture.

THIRD QUARTER 2013 SEGMENT RESULTS



Amounts and percentages may not recalculate due to rounding		Three months ended					Increase (Decrease)
Dunkin' Donuts U.S.		September 28, 2013			September 29, 2012		$ / #		%
	($ in thousands except as otherwise noted)
Comparable store sales growth		4.2		%	2.8	%
Systemwide sales growth		8.6		%	5.6	%
Franchisee reported sales (in millions)		$	1,719.5		1,583.3		136.2		8.6	%

Revenues:
Royalty income		$	92,838		85,328		7,510		8.8	%
Franchise fees		9,592			7,913		1,679		21.2	%
Rental income		24,455			23,720		735		3.1	%
Sales at company-owned restaurants		6,250			5,913		337		5.7	%
Other revenues		1,119			748		371		49.6	%
Total revenues		$	134,254		123,622		10,632		8.6	%

Segment profit		$	100,278		91,122		9,156		10.0	%

Points of distribution		7,528			7,157		371		5.2	%
Gross openings		107			108		(1	)	(0.9	)%
Net openings		81			78		3		3.8	%

Dunkin' Donuts U.S. revenues of $134.3 million represented an increase of 8.6 percent year-over-year. The increase in revenue was primarily a result of increased royalty income, as well as increased franchise fees due to favorable development mix and incremental franchise renewals.

Dunkin' Donuts U.S. segment profit in the third quarter increased $9.2 million over the prior year to $100.3 million. This increase was driven primarily by revenue growth, partially offset by increased personnel costs related to continued investments in our Dunkin’ Donuts U.S. contiguous growth strategy.



Amounts and percentages may not recalculate due to rounding		Three months ended					Increase (Decrease)
Dunkin' Donuts International		September 28, 2013			September 29, 2012		$ / #		%
	($ in thousands except as otherwise noted)
Comparable store sales growth (decline)		(1.4		)%	2.1	%
Systemwide sales growth		1.4		%	1.2	%
Franchisee reported sales (in millions)		$	165.8		163.4		2.4		1.4	%

Revenues:
Royalty income		$	3,342		3,224		118		3.7	%
Franchise fees		770			379		391		103.2	%
Rental income		37			69		(32	)	(46.4	)%
Other revenues		25			(1	)	26		n/m
Total revenues		$	4,174		3,671		503		13.7	%

Segment profit (loss)		$	(1,052	)	2,402		(3,454	)	n/m

Points of distribution		3,267			3,126		141		4.5	%
Gross openings		128			71		57		80.3	%
Net openings		67			36		31		86.1	%

Dunkin' Donuts International systemwide sales increased 1.4 percent from the prior year period, driven by sales growth in Germany and the Middle East. On a constant currency basis, systemwide sales increased by approximately 2 percent.

Dunkin' Donuts International revenues of $4.2 million represented an increase of 13.7% year-over-year. The increase in revenue was primarily a result of increased franchise fees driven by additional gross development and increased royalty income.

Segment profit (loss) for Dunkin' Donuts International declined $3.5 million to a loss of $1.1 million, primarily due to $3.7 million in write-downs related to our investments in the Dunkin' Donuts Spain joint venture, offset by revenue growth.



Amounts and percentages may not recalculate due to rounding		Three months ended					Increase (Decrease)
Baskin-Robbins U.S.		September 28, 2013			September 29, 2012		$ / #		%
	($ in thousands except as otherwise noted)
Comparable store sales growth		3.2		%	1.1	%
Systemwide sales growth (decline)		4.2		%	(2.2	)%
Franchisee reported sales (in millions)		$	152.2		145.9		6.3		4.3	%

Revenues:
Royalty income		$	7,595		7,381		214		2.9	%
Franchise fees		305			262		43		16.4	%
Rental income		802			969		(167	)	(17.2	)%
Sales of ice cream products		986			908		78		8.6	%
Other revenues		2,211			2,147		64		3.0	%
Total revenues		$	11,899		11,667		232		2.0	%

Segment profit		$	8,327		8,069		258		3.2	%

Points of distribution		2,471			2,492		(21	)	(0.8	)%
Gross openings		20			11		9		81.8	%
Net openings (closings)		1			(1	)	2		n/m

Baskin-Robbins U.S. revenue increased 2.0 percent from the prior year period to $11.9 million due primarily to increased royalty income driven by a 4.2 percent increase in systemwide sales as a result of comparable store sales growth of 3.2 percent, offset by a decline in rental income due to a decline in the number of leased locations.

Segment profit for the Baskin-Robbins U.S. segment increased $0.3 million, or 3.2 percent, year-over-year primarily as a result of increased revenues.



Amounts and percentages may not recalculate due to rounding		Three months ended					Increase (Decrease)
Baskin-Robbins International		September 28, 2013			September 29, 2012		$ / #		%
	($ in thousands except as otherwise noted)
Comparable store sales growth		0.7		%	3.0	%
Systemwide sales growth (decline)		(2.6		)%	5.2	%
Franchisee reported sales (in millions)		$	399.2		409.8		(10.5	)	(2.6	)%

Revenues:
Royalty income		$	2,552		2,925		(373	)	(12.8	)%
Franchise fees		492			435		57		13.1	%
Rental income		124			143		(19	)	(13.3	)%
Sales of ice cream products		29,439			26,210		3,229		12.3	%
Other revenues		152			(56	)	208		n/m
Total revenues		$	32,759		29,657		3,102		10.5	%

Segment profit		$	16,795		16,047		748		4.7	%

Points of distribution		4,674			4,428		246		5.6	%
Gross openings		107			121		(14	)	(11.6	)%
Net openings		73			74		(1	)	(1.4	)%

Baskin-Robbins International systemwide sales decreased 2.6 percent from the prior year period driven by an unfavorable impact of exchange rates on sales in Japan, offset by sales growth in South Korea and the Middle East. On a constant currency basis, systemwide sales increased by approximately 7 percent.

Baskin-Robbins International revenues increased 10.5 percent year-over-year to $32.8 million primarily from increased sales of ice cream products to the Middle East and an increase in distribution costs billed to customers, offset by a decline in sales of ice cream products to Australia due to timing of shipments.

Segment profit increased 4.7 percent year-over-year to $16.8 million, resulting from an increase in net margin on ice cream driven by the increase in sales to the Middle East and reduced cost of ice cream products primarily resulting from the shift in manufacturing to Dean Foods, offset by $0.5 million of additional costs associated with the Baskin-Robbins Australia sale transaction.

COMPANY UPDATES


•	The Company today announced that the Board of Directors declared a fourth quarter cash dividend of $0.19 per share, payable on November 26, 2013 to shareholders of record as of the close of business on November 18, 2013.

Conference Call

As previously announced, Dunkin' Brands will be holding a conference call today at 8:00 am ET hosted by Nigel Travis, Chief Executive Officer, and Paul Carbone, Chief Financial Officer. The dial-in number is (866) 393-1607 or

(914) 495-8556, conference number 76546192. 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; 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. Adjusted operating income and adjusted net income are reconciled from the respective measures determined under GAAP in the attached table “Dunkin' Brands Group, Inc. 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 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.

About Dunkin' Brands Group, Inc.

With more than 17,900 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 third quarter 2013, Dunkin' Brands' nearly 100 percent franchised business model included nearly 10,800 Dunkin' Donuts restaurants and more than 7,100 Baskin-Robbins restaurants. For the full-year 2012, the company had franchisee-reported sales of approximately $8.8 billion. Dunkin' Brands Group, Inc. is headquartered in Canton, Mass.

Contact(s):

Stacey Caravella (Investors)

Director, Investor Relations

Dunkin' Brands, Inc.

investor.relations@dunkinbrands.com

781-737-3200

Karen Raskopf (Media)

SVP, Corporate Communications

Dunkin' Brands, Inc.

karen.raskopf@dunkinbrands.com

781-737-5200



DUNKIN’ BRANDS GROUP, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
	Three months ended					Nine months ended
	September 28, 2013			September 29, 2012		September 28, 2013		September 29, 2012

Revenues:
Franchise fees and royalty income	$	117,486		107,847		334,045		309,819
Rental income	25,437			24,918		72,924		73,859
Sales of ice cream products	30,429			27,118		86,818		78,283
Sales at company-owned restaurants	6,250			5,913		18,261		16,706
Other revenues	6,715			5,923		18,615		17,811
Total revenues	186,317			171,719		530,663		496,478
Operating costs and expenses:
Occupancy expenses—franchised restaurants	13,445			12,965		39,041		38,797
Cost of ice cream products	20,899			19,211		61,187		56,000
Company-owned restaurant expenses	6,222			6,021		17,817		16,967
General and administrative expenses, net^(a)	57,703			55,630		174,287		186,550
Depreciation	5,591			9,011		16,961		22,533
Amortization of other intangible assets	6,938			6,669		20,085		20,317
Long-lived asset impairment charges	92			564		447		950
Total operating costs and expenses	110,890			110,071		329,825		342,114
Net income of equity method investments:
Net income, excluding impairment	8,201			8,697		16,070		17,314
Impairment charge^(b)	(873		)	—		(873	)	—
Total net income of equity method investments	7,328			8,697		15,197		17,314
Other operating income (expense)	(518		)	—		6,466		—
Operating income	82,237			70,345		222,501		171,678
Other income (expense):
Interest income	105			126		310		383
Interest expense	(19,805		)	(18,920	)	(60,523	)	(52,306	)
Loss on debt extinguishment and refinancing transactions	—			(3,963	)	(5,018	)	(3,963	)
Other gains (losses), net	12			(265	)	(1,191	)	(472	)
Total other expense	(19,688		)	(23,022	)	(66,422	)	(56,358	)
Income before income taxes	62,549			47,323		156,079		115,320
Provision for income taxes	22,505			18,022		51,664		41,886
Net income including noncontrolling interests	40,044			29,301		104,415		73,434
Net loss attributable to noncontrolling interests	(177		)	(225	)	(416	)	(539	)
Net income attributable to Dunkin’ Brands	$	40,221		29,526		104,831		73,973

Earnings per share—basic	$	0.38		0.26		0.99		0.63
Earnings per share—diluted	0.37			0.26		0.97		0.62


(a) Includes $2.8 million of reserves on accounts and notes receivable from our Dunkin' Donuts Spain joint venture.
(b) Represents an impairment of the full carrying value of our investment in the Dunkin' Donuts Spain joint venture.



DUNKIN’ BRANDS GROUP, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
	September 28, 2013		December 29, 2012
Assets
Current assets:
Cash and cash equivalents	$	209,800	252,618
Accounts, notes, and other receivables, net	55,961		53,056
Other current assets	109,480		114,106
Total current assets	375,241		419,780
Property and equipment, net	178,639		181,172
Equity method investments	171,025		174,823
Goodwill and other intangible assets, net	2,351,115		2,371,684
Other assets	73,938		70,054
Total assets	$	3,149,958	3,217,513
Liabilities, Redeemable Noncontrolling Interests, and Stockholders’ Equity
Current liabilities:
Current portion of long-term debt	$	5,000	26,680
Accounts payable	11,955		16,256
Other current liabilities	253,116		310,579
Total current liabilities	270,071		353,515
Long-term debt, net	1,823,226		1,823,278
Deferred income taxes, net	563,571		569,126
Other long-term liabilities	106,774		121,619
Total long-term liabilities	2,493,571		2,514,023
Redeemable noncontrolling interests	5,113		—
Total stockholders’ equity	381,203		349,975
Total liabilities, redeemable noncontrolling interests, and stockholders’ equity	$	3,149,958	3,217,513



DUNKIN’ BRANDS GROUP, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
	Nine months ended
	September 28, 2013			September 29, 2012

Net cash provided by operating activities	$	65,315		57,430
Cash flows from investing activities:
Additions to property and equipment	(20,930		)	(13,379	)
Proceeds from sale of joint venture	7,200			—
Other, net	755			(925	)
Net cash used in investing activities	(12,975		)	(14,304	)
Cash flows from financing activities:
Proceeds from (repayment of) long-term debt, net	(19,157		)	380,559
Payment of deferred financing and other debt-related costs	(6,157		)	(5,773	)
Dividends paid on common stock	(60,707		)	(54,189	)
Repurchases of common stock	(17,190		)	(450,343	)
Exercise of stock options	6,287			1,791
Other, net	1,906			3,397
Net cash used in financing activities	(95,018		)	(124,558	)
Effect of exchange rates on cash and cash equivalents	(140		)	359
Decrease in cash and cash equivalents	(42,818		)	(81,073	)
Cash and cash equivalents, beginning of period	252,618			246,715
Cash and cash equivalents, end of period	$	209,800		165,642



DUNKIN’ BRANDS GROUP, INC. AND SUBSIDIARIES
Non-GAAP Reconciliations
(In thousands, except per share data)
(Unaudited)
	Three months ended					Nine months ended
	September 28, 2013			September 29, 2012		September 28, 2013		September 29, 2012
Operating income	$	82,237		70,345		222,501		171,678
Operating income margin	44.1		%	41.0	%	41.9	%	34.6	%
Adjustments:
Amortization of other intangible assets	6,938			6,669		20,085		20,317
Long-lived asset impairment charges	92			564		447		950
Third-party product volume guarantee	—			—		7,500		—
Secondary offering costs	—			2,579		—		4,774
Peterborough plant closure^(a)	66			5,271		654		8,949
Bertico litigation^(b)	—			—		—		20,680
Adjusted operating income	$	89,333		85,428		251,187		227,348
Adjusted operating income margin	47.9		%	49.7	%	47.3	%	45.8	%

Net income attributable to Dunkin' Brands	$	40,221		29,526		104,831		73,973
Adjustments:
Amortization of other intangible assets	6,938			6,669		20,085		20,317
Long-lived asset impairment charges	92			564		447		950
Third-party product volume guarantee	—			—		7,500		—
Secondary offering costs	—			2,579		—		4,774
Peterborough plant closure^(a)	66			5,271		654		8,949
Loss on debt extinguishment and refinancing transactions	—			3,963		5,018		3,963
Bertico litigation^(b)	—			—		—		20,680
Tax impact of adjustments, excluding Bertico litigation^(c)	(2,838		)	(7,618	)	(13,481	)	(15,581	)
Tax impact of Bertico adjustment^(d)	—			1,164		—		(4,959	)
Income tax audit settlements^(e)	—			—		(8,417	)	—
State tax apportionment^(f)	—			—		2,868		—
Adjusted net income	$	44,479		42,118		119,505		113,066

Adjusted net income	$	44,479		42,118		119,505		113,066
Less: Adjusted net income allocated to participating securities	—			(36	)	—		(178	)
Adjusted net income available to common shareholders	$	44,479		42,082		119,505		112,888
Weighted average number of common shares – diluted	108,164,925			115,075,000		108,178,632		119,459,154
Diluted adjusted earnings per share	$	0.41		0.37		1.10		0.94

(a) For the three and nine months ended September 28, 2013, the adjustment represents 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. For the three and nine months ended September 29, 2012, the adjustment represents transition-related general and administrative costs, as well as accelerated depreciation and incremental costs of ice cream products.
(b) Represents the incremental legal reserve recorded related to the Quebec Superior Court’s ruling in the Bertico litigation, in which the Court found for the Plaintiffs and issued a judgment against Dunkin’ Brands in the amount of approximately $C16.4 million, plus costs and interest.
(c) Tax impact of adjustments, excluding the Bertico litigation, calculated at a 40% effective tax rate.
(d) Tax impact of Bertico litigation adjustment calculated as if the incremental reserve had not been recorded. The tax impact recorded in the second quarter of 2012 was a $3.9 million tax benefit representing the actual direct tax benefit expected to be realized, as well as a $2.2 million tax benefit recorded that fully reversed in the third and fourth quarters of 2012 based on interim tax provision requirements. The tax impact for the three months ended September 29, 2012 represents $1.2 million of the tax benefit that was expected to reverse.
(e) Represents income tax benefits resulting from the resolution of historical tax positions settled during the period.
(f) Primarily represents deferred tax expense recognized due to an increase in our overall state tax rate resulting from a shift in estimated apportionment of income within state jurisdictions.

DUNKIN' BRANDS GROUP, INC. - FORM 8-K - EX-99.1 - PRESS RELEASE - October 23, 2013

Attached files

DUNKIN' BRANDS GROUP, INC. Reports