Exhibit 99.1
Dunkin’ Brands Reports Third Quarter 2011 Results
Adjusted net income increases approximately 32 percent year-over-year
CANTON, Mass. (Nov. 1, 2011) – Dunkin’ Brands Group, Inc. (Nasdaq: DNKN), the parent company of Dunkin’ Donuts (DD) and Baskin-Robbins (BR), today reported results for the quarter ended September 24, 2011. “As a result of our successful product innovation, powerful marketing, and an intense focus on guest satisfaction and operational execution, we delivered robust third quarter results,” said Nigel Travis, Chief Executive Officer, Dunkin’ Brands Group, Inc. and President, Dunkin’ Donuts. “Our strong increases in systemwide sales and consolidated U.S. comparable store sales, which included positive growth for both Dunkin’ Donuts and Baskin-Robbins, reflect the strength of our overall business and underscore the opportunity we have to accelerate our profitable growth in the U.S. and around the world.”
Financial Highlights
| | | | | | | | | | | | | | | | |
| ($ in millions, except percentages and per share data) | | Quarter 3 | | | Increase (Decrease) | |
| | | 2011 | | | 2010 | | | $/# | | | % | |
Systemwide Sales Growth | | | 8.9% | | | | 6.6% | | | | | | | | | |
Consolidated U.S. Comparable Store Sales Growth | | | 5.6% | | | | 1.8% | | | | | | | | | |
DD U.S. Comparable Store Sales Growth | | | 6.0% | | | | 2.7% | | | | | | | | | |
BR U.S. Comparable Store Sales Growth | | | 1.7% | | | | (5.8)% | | | | | | | | | |
Consolidated Net POD Development | | | 98 | | | | 214 | | | | (116) | | | | (54.2)% | |
DD Global PODs at period end | | | 9,900 | | | | 9,673 | | | | 227 | | | | 2.3% | |
BR Global PODs at period end | | | 6,625 | | | | 6,374 | | | | 251 | | | | 3.9% | |
Consolidated Global PODs at period end | | | 16,525 | | | | 16,047 | | | | 478 | | | | 3.0% | |
| | | | |
Revenues | | $ | 163.5 | | | $ | 149.5 | | | $ | 14.0 | | | | 9.3% | |
Operating Income | | | 54.1 | | | | 54.6 | | | | (0.5) | | | | (0.8)% | |
Adjusted Operating Income(1) | | | 75.9 | | | | 62.6 | | | | 13.3 | | | | 21.3% | |
Net Income | | | 7.4 | | | | 18.8 | | | | (11.4) | | | | (60.7)% | |
Adjusted Net Income(1) | | | 31.3 | | | | 23.7 | | | | 7.7 | | | | 32.5% | |
Earnings (Loss) per Share – Basic and Diluted: | | | | | | | | | | | | | | | | |
Class L | | $ | 4.46 | | | $ | 1.25 | | | $ | 3.21 | | | | 256.8% | |
Common | | | (1.01) | | | | (0.24) | | | | (0.77) | | | | (320.8)% | |
| | | | |
Diluted Adjusted Earnings per Pro Forma Common Share(1) | | | 0.28 | | | | 0.24 | | | | 0.04 | | | | 16.7% | |
(amounts and percentages may not recalculate due to rounding)
| (1) | Adjusted operating income and adjusted net income are non-GAAP measures reflecting operating income and net income, determined in accordance with GAAP, further adjusted for amortization of intangible assets, impairment charges, and Sponsor management agreement termination fee, and in the case of adjusted net income, loss on debt extinguishment and refinancing charges, net of the tax impact of such adjustments. Diluted adjusted earnings per pro forma common share is a non-GAAP measure, calculated using adjusted net income, and gives effect to the conversion of Class L common stock as if the conversion were completed at the beginning of the respective fiscal period. Please refer to “Non-GAAP Measures and Statistical Data,” “Dunkin’ Brands Group, Inc. Non-GAAP Reconciliations,” and “Dunkin’ Brands Group, Inc. Diluted Adjusted Earnings per Pro Forma Common Share” for further detail. |
Consolidated Key Highlights
Third quarter 2011 financial highlights included:
| | • | | Global systemwide sales increased 8.9 percent over the third quarter of 2010, primarily attributable to systemwide sales growth of 8.3 percent for Dunkin’ Donuts U.S., as well as a 13.0 percent year-over year increase for Baskin-Robbins International sales and a 13.7 percent year-over-year increase for Dunkin’ Donuts International sales. |
| | • | | Dunkin’ Donuts U.S comparable store sales (which includes stores open 54 weeks or more) increased 6.0 percent, driven by an increase in ticket and traffic, while Baskin-Robbins U.S. comparable store sales increased 1.7 percent. As a result, consolidated U.S. comparable store sales increased 5.6 percent. |
| | • | | Dunkin’ Brands’ franchisees and licensees opened 98 net new Dunkin’ Donuts and Baskin-Robbins locations on a global basis during the quarter and 332 net new locations, including one company-owned store, during the first nine months of 2011, increasing Dunkin’ Brands total points of distribution to 16,525. The Company expects franchisees to open more than 600 net new restaurants for the year on a global basis. |
| | • | | Revenues grew by more than 9 percent, to $163.5 million, for the third quarter of 2011 compared to the same period in 2010, primarily as a result of increased franchisee fees and royalty income. |
| | • | | Operating income of $54.1 million for the third quarter remained relatively flat with the prior year, decreasing 0.8 percent, primarily due to one-time expenses of $14.7 million incurred in connection with the Company’s initial public offering (IPO). |
| | • | | Adjusted operating income was $75.9 million, a 21.3 percent increase over the same time last year. Adjusted operating income margin was 46.4 percent, representing a 450 basis |
| | point improvement over the same period last year, as a result of strong revenues and flat expenses. |
| | • | | Net income was $7.4 million, a decrease of 60.7 percent compared to the third quarter of 2010, due to one-time expenses incurred in connection with the Company’s IPO and related retirement of $375 million of senior notes. |
| | • | | Adjusted net income for the quarter grew to $31.3 million, a 32.5 percent increase compared to the third quarter of 2010, as a result of an increase in adjusted operating income and lower interest expense. |
| | • | | Diluted adjusted earnings per pro forma common share was $0.28, an increase of 17 percent over the third quarter of 2010. |
“Our performance for the quarter gives us confidence in our ability to achieve our longer term growth targets,” said Neil Moses, Dunkin’ Brands Group, Inc. Chief Financial Officer. “We believe these results demonstrate the opportunity that lies ahead for us and underscore the power of our nearly all-franchised business model with its high operating margins, low capital expenditure requirements and strong free cash flow.”
###
Conference Call
As previously announced, Dunkin’ Brands will be holding a conference call today at 8:00 am ET hosted by Chief Executive Officer, Nigel Travis, and Chief Financial Officer, Neil Moses. The dial-in number is (866) 393-1607 or (914) 495-8556, conference number 16955214. 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 athttp://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. These forward-looking statements include all matters that are not historical facts. 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; changes in working relationship 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 success of our growth strategy and international development; changes in commodity and food prices, particularly coffee, dairy products and sugar, and the 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; inability to recover our capital costs; changes in political, legal, economic or other factors in international markets; termination of a master franchise agreement or contracts with the U.S. military; currency exchange rates; the impact of food borne-illness or food safety issues or adverse public or medial opinions regarding the health effects of consuming our products; our ability to collect royalty payments from our franchisees and licensees; uncertainties relating to litigation; changes in regulatory requirements to our and our franchisees and licensees ability to comply with current or future regulatory requirements; review and audit of certain of our tax returns; 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 prospectus filed with the Securities and Exchange Commission on July 27, 2011. 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 results provided in accordance with U.S. generally accepted accounting principles (“GAAP”) throughout this document, the Company has provided non-GAAP measurements, adjusted operating income, adjusted operating income margin, adjusted net income, and diluted adjusted earnings per pro forma common 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 measurements are not intended to replace the presentation of our financial results in accordance with GAAP. Use of the term adjusted operating income, adjusted operating income margin, adjusted net income, and diluted adjusted earnings per pro forma common share may differ from similar measures reported by other companies. Adjusted operating income, adjusted operating income margin, and adjusted net income are reconciled from the
respective measures determined under GAAP in the attached table “Dunkin’ Brands Group, Inc. Non-GAAP Reconciliations.”
On August 1, 2011, the Company completed an initial public offering in which 22,250,000 shares of common stock were sold at an initial public offering price of $19.00 per share. Immediately prior to the offering, each share of the Company’s Class L common stock converted into 2.4338 shares of common stock. The number of common shares used in the calculations of diluted adjusted earnings per pro forma common share for the three and nine months ended September 24, 2011 and September 25, 2010 give effect to the conversion of all outstanding shares of Class L common stock at the conversion factor of 2.4338 common shares for each Class L share, as if the conversion was completed at the beginning of the respective fiscal period. The calculations of diluted adjusted earnings per pro forma common share also include the dilutive effect of common restricted shares and stock options, using the treasury stock method. Shares sold in the offering are included in the diluted adjusted earnings per pro forma common share calculations beginning on the date that such shares were actually issued. Diluted adjusted earnings per pro forma common share is calculated using adjusted net income, as defined above. See the attached table “Dunkin’ Brands Group, Inc. Diluted Adjusted Earnings per Pro Forma Common Share” for further detail.
Additionally, the Company has included metrics such as franchisee-reported sales, system-wide sales growth, and comparable store sales growth, which are commonly used statistical measures in the quick-service restaurant industry and are important to understanding Company performance.
Franchisee-reported sales include sales at franchisee restaurants, including joint ventures. The Company uses “System-wide 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 system-wide sales are driven by changes in average comparable store sales and changes in the number of restaurants.
The Company uses “Consolidated US comparable store sales,” “DD domestic comparable store sales” and “BR domestic comparable store sales,” 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 16,500 points of distribution in 56 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 hardserve ice cream. At the end of 2010, Dunkin’ Brands’ nearly 100 percent franchised business model included 9,760 Dunkin’ Donuts restaurants and 6,433 Baskin-Robbins restaurants, and the company had system-wide sales of approximately $7.7 billion. Dunkin’ Brands Group, Inc. is headquartered in Canton, Mass. The Company’s website is located at www.dunkinbrands.com.
Contact(s):
| | |
| Paul Carbone (Investors) | | Michelle King (Media) |
| Vice President, Strategy & Finance | | Director, Global Media Relations |
| Dunkin’ Brands, Inc. | | Dunkin’ Brands, Inc. |
| investor.relations@dunkinbrands.com | | michelle.king@dunkinbrands.com |
| 781-737-3200 | | 781-737-5200 |
SEGMENT RESULTS
| | | 0000000... | | | | 0000000... | | | | 0000000... | | | | 0000000... | |
| | | Three months ended | | | Increase (Decrease) | |
Dunkin’ Donuts U.S. | | September 24,
2011 | | | September 25,
2011 | | | $ | | | % | |
| | | ($ in millions) | |
Systemwide sales growth | | | | | | | | | | | | | | | 8.3% | |
Franchisee reported sales | | $ | 1,501.4 | | | $ | 1,383.5 | | | $ | 117.8 | | | | 8.5% | |
Revenues | | $ | 113.9 | | | $ | 100.5 | | | $ | 13.4 | | | | 13.4% | |
Segment profit | | $ | 89.0 | | | $ | 72.3 | | | $ | 16.7 | | | | 23.0% | |
Points of distribution | | | 6,895 | | | | 6,698 | | | | 197 | | | | 2.9% | |
Gross openings | | | 91 | | | | 81 | | | | 10 | | | | 12.3% | |
Net openings | | | 57 | | | | 57 | | | | — | | | | — % | |
| | | 00000000. | | | | 00000000. | | | | 00000000. | | | | 00000000. | |
| | | Three months ended | | | Increase (Decrease) | |
Dunkin’ Donuts International | | September 24,
2011 | | | September 25,
2011 | | | $ | | | % | |
| | | ($ in millions) | |
Systemwide sales | | | | | | | | | | | | | | | 13.7% | |
Franchisee reported sales | | $ | 161.5 | | | $ | 142.0 | | | $ | 19.5 | | | | 13.7% | |
Revenues | | $ | 3.7 | | | $ | 3.6 | | | $ | 0.1 | | | | 3.3% | |
Segment profit | | $ | 2.5 | | | $ | 3.7 | | | $ | (1.2) | | | | (32.5)% | |
Points of distribution | | | 3,005 | | | | 2,975 | | | | 30 | | | | 1.0% | |
Gross openings | | | 70 | | | | 169 | | | | (99) | | | | (58.6)% | |
Net openings (closings) | | | (24) | | | | 92 | | | | (116) | | | | (126.1)% | |
| | | 00000000 | | | | 00000000 | | | | 00000000 | | | | 00000000 | |
| | | Three months ended | | | Increase (Decrease) | |
Baskin Robbins U.S. | | September 24,
2011 | | | September 25,
2011 | | | $ | | | % | |
| | | ($ in millions) | |
Systemwide sales | | | | | | | | | | | | | | | (0.1)% | |
Franchisee reported sales | | $ | 148.1 | | | $ | 148.3 | | | $ | (0.2) | | | | (0.1)% | |
Revenues | | $ | 12.0 | | | $ | 12.3 | | | $ | (0.3) | | | | (2.5)% | |
Segment profit | | $ | 7.0 | | | $ | 8.8 | | | $ | (1.8) | | | | (20.5)% | |
Points of distribution | | | 2,492 | | | | 2,558 | | | | (66) | | | | (2.6)% | |
Gross openings | | | 12 | | | | 16 | | | | (4) | | | | (25.0)% | |
Net closings | | | (18) | | | | (14) | | | | (4) | | | | 28.6% | |
| | | 00000000 | | | | 00000000 | | | | 00000000 | | | | 00000000 | |
| | | Three months ended | | | Increase (Decrease) | |
Baskin Robbins International | | September 24,
2011 | | | September 25,
2011 | | | $ | | | % | |
| | | ($ in millions) | |
Systemwide sales | | | | | | | | | | | | | | | 13.0% | |
Franchisee reported sales | | $ | 390.7 | | | $ | 345.9 | | | $ | 44.8 | | | | 13.0% | |
Revenues | | $ | 28.1 | | | $ | 25.3 | | | $ | 2.8 | | | | 11.1% | |
Segment profit | | $ | 14.5 | | | $ | 13.9 | | | $ | 0.5 | | | | 3.8% | |
Points of distribution | | | 4,133 | | | | 3,816 | | | | 317 | | | | 8.3% | |
Gross openings | | | 126 | | | | 116 | | | | 10 | | | | 8.6% | |
Net openings | | | 83 | | | | 79 | | | | 4 | | | | 5.1% | |
DUNKIN’ BRANDS GROUP, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(In thousands)
(Unaudited)
| | | | | | | | | | | | | | | | |
| | | Three months ended | | | Nine months ended | |
| | | September 24,
2011 | | | September 25,
2010 | | | September 24,
2011 | | | September 25,
2010 | |
| | | | | | (As Adjusted) | | | | | | (As Adjusted) | |
Revenues: | | | | | | | | | | | | | | | | |
Franchise fees and royalty income | | $ | 104,562 | | | | 92,125 | | | | 288,660 | | | | 263,020 | |
Rental income | | | 23,676 | | | | 23,375 | | | | 69,950 | | | | 69,807 | |
Sales of ice cream products | | | 25,591 | | | | 23,415 | | | | 73,532 | | | | 65,116 | |
Other revenues | | | 9,679 | | | | 10,616 | | | | 27,551 | | | | 29,416 | |
| | | | | | | | | | | | | | | | |
Total revenues | | | 163,508 | | | | 149,531 | | | | 459,693 | | | | 427,359 | |
| | | | | | | | | | | | | | | | |
Operating costs and expenses: | | | | | | | | | | | | | | | | |
Occupancy expenses—franchised restaurants | | | 13,073 | | | | 12,657 | | | | 38,278 | | | | 39,147 | |
Cost of ice cream products | | | 18,975 | | | | 16,419 | | | | 52,795 | | | | 44,568 | |
General and administrative expenses, net | | | 71,465 | | | | 59,220 | | | | 179,408 | | | | 163,083 | |
Depreciation | | | 6,128 | | | | 6,211 | | | | 18,350 | | | | 19,159 | |
Amortization of other intangible assets | | | 7,001 | | | | 7,762 | | | | 21,106 | | | | 25,315 | |
Impairment charges | | | 163 | | | | 265 | | | | 1,220 | | | | 2,955 | |
| | | | | | | | | | | | | | | | |
Total operating costs and expenses | | | 116,805 | | | | 102,534 | | | | 311,157 | | | | 294,227 | |
Equity in net income of joint ventures | | | 7,409 | | | | 7,577 | | | | 12,206 | | | | 16,013 | |
| | | | | | | | | | | | | | | | |
Operating income | | | 54,112 | | | | 54,574 | | | | 160,742 | | | | 149,145 | |
| | | | | | | | | | | | | | | | |
Other income (expense): | | | | | | | | | | | | | | | | |
Interest income | | | 138 | | | | 37 | | | | 403 | | | | 123 | |
Interest expense | | | (24,065 | ) | | | (25,648 | ) | | | (86,905 | ) | | | (80,721 | ) |
Loss on debt extinguishment and refinancing transactions | | | (18,050 | ) | | | — | | | | (34,222 | ) | | | (3,693 | ) |
Other gains, net | | | (423 | ) | | | (4 | ) | | | (11 | ) | | | (33 | ) |
| | | | | | | | | | | | | | | | |
Total other expense | | | (42,400 | ) | | | (25,615 | ) | | | (120,735 | ) | | | (84,324 | ) |
| | | | | | | | | | | | | | | | |
Income before income taxes | | | 11,712 | | | | 28,959 | | | | 40,007 | | | | 64,821 | |
| | | | |
Provision for income taxes | | | 4,300 | | | | 10,117 | | | | 17,156 | | | | 22,704 | |
| | | | | | | | | | | | | | | | |
Net income | | $ | 7,412 | | | | 18,842 | | | | 22,851 | | | | 42,117 | |
| | | | | | | | | | | | | | | | |
Earnings (loss) per share: | | | | | | | | | | | | | | | | |
Class L – basic and diluted | | $ | 4.46 | | | | 1.25 | | | | 6.14 | | | | 3.69 | |
Common – basic and diluted | | $ | (1.01 | ) | | | (0.24 | ) | | | (2.00 | ) | | | (1.02 | ) |
DUNKIN’ BRANDS GROUP, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
| | | | | | | | |
| | | September 24,
2011 | | | December 25,
2010 | |
| Assets | | | | | | | | |
Current assets: | | | | | | | | |
Cash and cash equivalents | | $ | 181,849 | | | | 134,100 | |
Accounts, notes, and other receivable, net | | | 46,768 | | | | 79,943 | |
Other current assets | | | 61,010 | | | | 70,334 | |
| | | | | | | | |
Total current assets | | | 289,627 | | | | 284,377 | |
Property and equipment, net | | | 185,297 | | | | 193,273 | |
Investments in joint ventures | | | 181,280 | | | | 169,276 | |
Goodwill and other intangible assets, net | | | 2,402,994 | | | | 2,424,312 | |
Other assets | | | 70,247 | | | | 76,050 | |
| | | | | | | | |
Total assets | | $ | 3,129,445 | | | | 3,147,288 | |
| | | | | | | | |
| Liabilities, Common Stock, and Stockholders’ Equity (Deficit) | | | | | | | | |
Current liabilities: | | | | | | | | |
Current portion of long-term debt | | $ | 14,965 | | | | 12,500 | |
Accounts payable | | | 12,598 | | | | 9,822 | |
Other current liabilities | | | 207,089 | | | | 258,233 | |
| | | | | | | | |
Total current liabilities | | | 234,652 | | | | 280,555 | |
| | | | | | | | |
Long-term debt, net | | | 1,472,359 | | | | 1,847,016 | |
Deferred income taxes, net | | | 563,703 | | | | 586,337 | |
Other long-term liabilities | | | 125,494 | | | | 127,139 | |
| | | | | | | | |
Total long-term liabilities | | | 2,161,556 | | | | 2,560,492 | |
| | | | | | | | |
Common stock, Class L | | | — | | | | 840,582 | |
| | |
Stockholders’ equity (deficit): | | | | | | | | |
Total stockholders’ equity (deficit) | | | 733,237 | | | | (534,341 | ) |
| | | | | | | | |
Total liabilities, common stock, and stockholders’ equity (deficit) | | $ | 3,129,445 | | | | 3,147,288 | |
| | | | | | | | |
DUNKIN’ BRANDS GROUP, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
| | | | | | | | |
| | | Nine months ended | |
| | | September 24,
2011 | | | September 25,
2010 | |
Cash flows from operating activities: | | | | | | | | |
Net income | | $ | 22,851 | | | | 42,117 | |
Adjustments to reconcile net income to net cash provided by operating activities: | | | | | | | | |
Depreciation and amortization | | | 39,456 | | | | 44,474 | |
Loss on debt extinguishment and refinancing transactions | | | 34,222 | | | | 3,693 | |
Deferred income taxes | | | 488 | | | | (7,001 | ) |
Equity in net income of joint ventures | | | (12,206 | ) | | | (16,013 | ) |
Dividends received from joint ventures | | | 7,362 | | | | 6,603 | |
Other non-cash adjustments, net | | | 6,837 | | | | 8,034 | |
Change in operating assets and liabilities: | | | | | | | | |
Restricted cash | | | — | | | | 18,161 | |
Accounts, notes, and other receivables, net | | | 32,047 | | | | 21,334 | |
Other current liabilities | | | (48,420 | ) | | | (38,503 | ) |
Liabilities of advertising funds, net | | | (1,645 | ) | | | 1,568 | |
Other, net | | | (9,951 | ) | | | 7,733 | |
| | | | | | | | |
Net cash provided by operating activities | | | 71,041 | | | | 92,200 | |
| | | | | | | | |
Cash flows from investing activities: | | | | | | | | |
Additions to property and equipment | | | (12,800 | ) | | | (11,109 | ) |
Other, net | | | 2,115 | | | | — | |
| | | | | | | | |
Net cash used in investing activities | | | (10,685 | ) | | | (11,109 | ) |
| | | | | | | | |
Cash flows from financing activities: | | | | | | | | |
Repayment of long-term debt, net | | | (385,366 | ) | | | (100,765 | ) |
Payment of deferred financing and other debt-related costs | | | (20,087 | ) | | | — | |
Proceeds from issuance of common stock, net | | | 393,304 | | | | 895 | |
Repurchases of common stock | | | (286 | ) | | | (3,890 | ) |
Change in restricted cash | | | 177 | | | | 548 | |
Other, net | | | 26 | | | | (199 | ) |
| | | | | | | | |
Net cash used in financing activities | | | (12,232 | ) | | | (103,411 | ) |
| | | | | | | | |
Effect of exchange rates on cash and cash equivalents | | | (375 | ) | | | 34 | |
| | | | | | | | |
Increase (decrease) in cash and cash equivalents | | | 47,749 | | | | (22,286 | ) |
Cash and cash equivalents, beginning of period | | | 134,100 | | | | 53,210 | |
| | | | | | | | |
Cash and cash equivalents, end of period | | $ | 181,849 | | | | 30,924 | |
| | | | | | | | |
DUNKIN’ BRANDS GROUP, INC.
Non-GAAP Reconciliations
(In thousands)
| | | | | | | | | | | | | | | | |
| | | Three months ended | | | Nine months ended | |
| | | September 24,
2011 | | | September 25,
2010 | | | September 24,
2011 | | | September 25,
2010 | |
Operating income | | $ | 54,112 | | | $ | 54,574 | | | $ | 160,742 | | | $ | 149,145 | |
| | | | |
Adjustments: | | | | | | | | | | | | | | | | |
Sponsor termination fee | | | 14,671 | | | | — | | | | 14,671 | | | | — | |
Amortization of other intangible assets | | | 7,001 | | | | 7,762 | | | | 21,106 | | | | 25,315 | |
Impairment charges | | | 163 | | | | 265 | | | | 1,220 | | | | 2,955 | |
| | | | | | | | | | | | | | | | |
Adjusted operating income | | $ | 75,947 | | | $ | 62,601 | | | $ | 197,739 | | | $ | 177,415 | |
| | | | | | | | | | | | | | | | |
Operating income margin | | | 33.1% | | | | 36.5% | | | | 35.0% | | | | 34.9% | |
| | | | |
Adjustments: | | | | | | | | | | | | | | | | |
Sponsor termination fee | | | 8.9% | | | | 0.0% | | | | 3.2% | | | | 0.0% | |
Amortization of other intangible assets | | | 4.3% | | | | 5.2% | | | | 4.6% | | | | 5.9% | |
Impairment charges | | | 0.1% | | | | 0.2% | | | | 0.2% | | | | 0.7% | |
| | | | | | | | | | | | | | | | |
Adjusted operating income margin | | | 46.4% | | | | 41.9% | | | | 43.0% | | | | 41.5% | |
| | | | | | | | | | | | | | | | |
Net income | | $ | 7,412 | | | $ | 18,842 | | | $ | 22,851 | | | $ | 42,117 | |
| | | | |
Adjustments: | | | | | | | | | | | | | | | | |
Sponsor termination fee | | | 14,671 | | | | — | | | | 14,671 | | | | — | |
Amortization of other intangible assets | | | 7,001 | | | | 7,762 | | | | 21,106 | | | | 25,315 | |
Impairment charges | | | 163 | | | | 265 | | | | 1,220 | | | | 2,955 | |
Loss on debt extinguishment and refinancing transactions | | | 18,050 | | | | — | | | | 34,222 | | | | 3,693 | |
Tax impact of adjustments(a) | | | (15,954) | | | | (3,211) | | | | (28,488) | | | | (12,785) | |
| | | | | | | | | | | | | | | | |
Adjusted net income | | $ | 31,343 | | | $ | 23,658 | | | $ | 65,582 | | | $ | 61,295 | |
| | | | | | | | | | | | | | | | |
| (a) | Tax impact of adjustments calculated at a 40% effective tax rate for each period presented. |
DUNKIN’ BRANDS GROUP, INC.
Diluted Adjusted Earnings per Pro Forma Common Share
| | | | | | | | | | | | | | | | |
| | | Three months ended | | | Nine months ended | |
| | | September 24,
2011 | | | September 25,
2010 | | | September 24,
2011 | | | September 25,
2010 | |
Adjusted net income (in thousands) | | $ | 31,343 | | | $ | 23,658 | | | $ | 65,582 | | | $ | 61,295 | |
| | | | |
Pro forma weighted average number of common shares – diluted: | | | | | | | | | | | | | | | | |
Weighted average number of Class L shares over period in which Class L shares were outstanding(1) | | | 22,866,379 | | | | 22,802,457 | | | | 22,845,378 | | | | 22,807,674 | |
Adjustment to weight Class L shares over respective fiscal period(1) | | | (15,328,012 | ) | | | — | | | | (5,104,722 | ) | | | — | |
| | | | | | | | | | | | | | | | |
Weighted average number of Class L shares over respective fiscal period | | | 7,538,367 | | | | 22,802,457 | | | | 17,740,656 | | | | 22,807,674 | |
Class L conversion factor | | | 2.4338 | | | | 2.4338 | | | | 2.4338 | | | | 2.4338 | |
| | | | | | | | | | | | | | | | |
Weighted average number of converted Class L shares | | | 18,347,071 | | | | 55,497,206 | | | | 43,177,665 | | | | 55,509,904 | |
Weighted average number of common shares | | | 93,529,128 | | | | 41,323,438 | | | | 58,807,271 | | | | 41,288,341 | |
| | | | | | | | | | | | | | | | |
Pro forma weighted average number of common shares – basic | | | 111,876,199 | | | | 96,820,644 | | | | 101,984,936 | | | | 96,798,245 | |
Incremental dilutive common shares(2) | | | 1,401,643 | | | | 225,445 | | | | 735,242 | | | | 190,867 | |
| | | | | | | | | | | | | | | | |
Pro forma weighted average number of common shares – diluted | | | 113,277,842 | | | | 97,046,089 | | | | 102,720,178 | | | | 96,989,112 | |
| | | | | | | | | | | | | | | | |
Diluted adjusted earnings per pro forma common share | | $ | 0.28 | | | $ | 0.24 | | | $ | 0.64 | | | $ | 0.63 | |
| | | | | | | | | | | | | | | | |
| (1) | The weighted average number of Class L shares in the actual Class L earnings per share calculation for the three and nine months ended September 24, 2011 represents the weighted average from the beginning of the period up through the date of conversion of the Class L shares into common shares. As such, the pro forma weighted average number of common shares includes an adjustment to the weighted average number of Class L shares outstanding to reflect the length of time the Class L shares were outstanding prior to conversion relative to the respective three and nine month periods. The converted Class L shares are already included in the weighted average number of common shares outstanding for the period after their conversion. |
| (2) | Represents the dilutive effect of restricted shares and stock options, using the treasury stock method. |
