Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 26, 2016 | May. 02, 2016 | |
Document Documentand Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Mar. 26, 2016 | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q1 | |
Trading Symbol | DNKN | |
Entity Registrant Name | DUNKIN' BRANDS GROUP, INC. | |
Entity Central Index Key | 1,357,204 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 91,643,204 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 26, 2016 | Dec. 26, 2015 |
Current assets: | ||
Cash and cash equivalents | $ 223,524 | $ 260,430 |
Restricted cash | 67,665 | 71,917 |
Accounts receivable, net of allowance for doubtful accounts of $5,846 and $5,627 as of March 26, 2016 and December 26, 2015, respectively | 52,310 | 53,142 |
Notes and other receivables, net of allowance for doubtful accounts of $662 and $1,007 as of March 26, 2016 and December 26, 2015, respectively | 22,043 | 75,218 |
Restricted assets of advertising funds | 40,544 | 38,554 |
Prepaid income taxes | 18,651 | 23,899 |
Prepaid expenses and other current assets | 32,507 | 34,664 |
Total current assets | 457,244 | 557,824 |
Property and equipment, net of accumulated depreciation of $115,112 and $111,625 as of March 26, 2016 and December 26, 2015, respectively | 180,699 | 182,614 |
Equity method investments | 111,690 | 106,878 |
Goodwill | 889,131 | 889,588 |
Other intangible assets, net of accumulated amortization of $244,612 and $239,715 as of March 26, 2016 and December 26, 2015, respectively | 1,395,456 | 1,401,208 |
Other assets | 59,714 | 59,007 |
Total assets | 3,093,934 | 3,197,119 |
Current liabilities: | ||
Current portion of long-term debt | 25,000 | 25,000 |
Capital lease obligations | 533 | 546 |
Accounts payable | 15,270 | 18,663 |
Liabilities of advertising funds | 45,782 | 50,189 |
Deferred income | 33,850 | 31,535 |
Other current liabilities | 219,558 | 292,859 |
Total current liabilities | 339,993 | 418,792 |
Long-term debt, net | 2,415,909 | 2,420,600 |
Capital lease obligations | 7,763 | 7,497 |
Unfavorable operating leases acquired | 12,571 | 12,975 |
Deferred income | 13,450 | 15,619 |
Deferred income taxes, net | 471,907 | 476,510 |
Other long-term liabilities | 66,933 | 65,869 |
Total long-term liabilities | $ 2,988,533 | $ 2,999,070 |
Commitments and contingencies (note 10) | ||
Stockholders’ equity (deficit): | ||
Preferred stock, $0.001 par value; 25,000,000 shares authorized; no shares issued and outstanding | $ 0 | $ 0 |
Common stock, $0.001 par value; 475,000,000 shares authorized; 91,574,960 issued and 91,547,793 outstanding as of March 26, 2016; 92,668,211 shares issued and 92,641,044 shares outstanding as of December 26, 2015 | 91 | 92 |
Additional paid-in capital | 868,284 | 876,557 |
Treasury stock, at cost; 27,167 shares as of March 26, 2016 and December 26, 2015 | 1,075 | 1,075 |
Accumulated deficit | (1,083,760) | (1,076,479) |
Accumulated other comprehensive loss | (18,132) | (20,046) |
Total stockholders’ deficit of Dunkin’ Brands | (234,592) | (220,951) |
Noncontrolling interests | 0 | 208 |
Total stockholders’ deficit | (234,592) | (220,743) |
Total liabilities and stockholders’ deficit | $ 3,093,934 | $ 3,197,119 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Mar. 26, 2016 | Dec. 26, 2015 |
Statement of Financial Position [Abstract] | ||
Accounts receivable, allowance for doubtful accounts | $ 5,846 | $ 5,627 |
Notes and other receivables, allowance for doubtful accounts | 662 | 1,007 |
Property and equipment, accumulated depreciation | 115,112 | 111,625 |
Other intangible assets, accumulated amortization | $ 244,612 | $ 239,715 |
Preferred stock, par value (in usd per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized (in shares) | 25,000,000 | 25,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in usd per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized (in shares) | 475,000,000 | 475,000,000 |
Common stock, shares issued (in shares) | 91,574,960 | 92,668,211 |
Common stock, shares outstanding (in shares) | 91,547,793 | 92,641,044 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 26, 2016 | Mar. 28, 2015 | |
Revenues: | ||
Franchise fees and royalty income | $ 123,783 | $ 115,325 |
Rental income | 23,225 | 23,627 |
Sales of ice cream and other products | 25,891 | 23,068 |
Sales at company-owned restaurants | 5,670 | 6,558 |
Other revenues | 11,207 | 17,327 |
Total revenues | 189,776 | 185,905 |
Operating costs and expenses: | ||
Occupancy expenses-franchised restaurants | 13,196 | 13,518 |
Cost of ice cream and other products | 17,234 | 15,346 |
Company-operated restaurant expenses | 6,493 | 6,858 |
General and administrative expenses, net | 61,195 | 57,840 |
Depreciation | 5,133 | 5,110 |
Amortization of other intangible assets | 5,761 | 6,200 |
Impairment charges | 93 | 264 |
Total operating costs and expenses | 109,105 | 105,136 |
Net income of equity method investments | 2,964 | 2,947 |
Other operating income, net | 1,698 | 24 |
Operating income | 85,333 | 83,740 |
Other income (expense), net: | ||
Interest income | 149 | 122 |
Interest expense | (24,881) | (22,164) |
Loss on debt extinguishment and refinancing transactions | 0 | (20,554) |
Other losses, net | (370) | (545) |
Total other expense, net | (25,102) | (43,141) |
Income before income taxes | 60,231 | 40,599 |
Provision for income taxes | 23,077 | 15,174 |
Net income including noncontrolling interests | 37,154 | 25,425 |
Net loss attributable to noncontrolling interests | 0 | (206) |
Net income attributable to Dunkin' Brands | $ 37,154 | $ 25,631 |
Earnings per share: | ||
Common-basic | $ 0.41 | $ 0.26 |
Common-diluted | 0.40 | 0.25 |
Cash dividends declared per common share | $ 0.30 | $ 0.27 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 26, 2016 | Mar. 28, 2015 | |
Statement of Comprehensive Income [Abstract] | ||
Net income including noncontrolling interests | $ 37,154 | $ 25,425 |
Other comprehensive income (loss), net: | ||
Effect of foreign currency translation, net of deferred tax expense (benefit) of $(198) and $258 for the three months ended March 26, 2016 and March 28, 2015, respectively | 2,257 | 1,379 |
Effect of interest rate swaps, net of deferred tax benefit of $217 for each of the three months ended March 26, 2016 and March 28, 2015 | (318) | (318) |
Other, net | (25) | (507) |
Total other comprehensive income, net | 1,914 | 554 |
Comprehensive income including noncontrolling interests | 39,068 | 25,979 |
Comprehensive loss attributable to noncontrolling interests | 0 | (206) |
Comprehensive income attributable to Dunkin’ Brands | $ 39,068 | $ 26,185 |
Consolidated Statements of Com6
Consolidated Statements of Comprehensive Income Consolidated Statements of Comprehensive Income (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 26, 2016 | Mar. 28, 2015 | |
Statement of Comprehensive Income [Abstract] | ||
Deferred tax effect, foreign currency translation | $ (198) | $ 258 |
Other Comprehensive Income (Loss), Reclassification Adjustment from AOCI on Derivatives, Tax | (217) | (217) |
Deferred tax expense, unrealized loss on pension plan | $ 0 | $ (11) |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 26, 2016 | Mar. 28, 2015 | |
Cash flows from operating activities: | ||
Net income including noncontrolling interests | $ 37,154 | $ 25,425 |
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | ||
Depreciation and amortization | 10,894 | 11,310 |
Amortization of debt issuance costs and original issue discount | 1,559 | 1,371 |
Loss on debt extinguishment and refinancing transactions | 0 | 20,554 |
Deferred income taxes | (4,251) | (6,261) |
Provision for (recovery of) bad debt | 42 | (243) |
Share-based compensation expense | 4,140 | 3,672 |
Net income of equity method investments | (2,964) | (2,947) |
Dividends received from equity method investments | 746 | 5,283 |
Gain on sale of real estate | (1,692) | 0 |
Other, net | (617) | (393) |
Change in operating assets and liabilities: | ||
Restricted cash | 4,236 | (65,772) |
Accounts, notes, and other receivables, net | 53,458 | 32,397 |
Prepaid income taxes, net | 5,276 | 13,424 |
Other current assets | 2 | (6,875) |
Accounts payable | (3,672) | (875) |
Other current liabilities | (72,403) | (45,105) |
Liabilities of advertising funds, net | (6,173) | (5,038) |
Deferred income | 144 | 2,534 |
Other, net | 646 | 8,559 |
Net cash provided by (used in) operating activities | 26,525 | (8,980) |
Cash flows from investing activities: | ||
Additions to property and equipment | (3,184) | (6,233) |
Proceeds from sale of real estate | 2,645 | 0 |
Other, net | 80 | (1,499) |
Net cash used in investing activities | (459) | (7,732) |
Cash flows from financing activities: | ||
Proceeds from issuance of long-term debt | 0 | 2,500,000 |
Repayment of long-term debt | (6,250) | (1,818,971) |
Payment of debt issuance and other debt-related costs | 0 | (40,953) |
Dividends paid on common stock | (27,395) | (25,688) |
Repurchases of common stock, including accelerated share repurchases | (30,000) | (459,821) |
Change in restricted cash | (6) | (6,900) |
Exercise of stock options | 1,086 | 1,209 |
Excess tax benefits from share-based compensation | 538 | 1,424 |
Other, net | (1,122) | (886) |
Net cash provided by (used in) financing activities | (63,149) | 149,414 |
Effect of exchange rates on cash and cash equivalents | 177 | (389) |
Increase (decrease) in cash and cash equivalents | (36,906) | 132,313 |
Cash and cash equivalents, beginning of period | 260,430 | 208,080 |
Cash and cash equivalents, end of period | 223,524 | 340,393 |
Supplemental cash flow information: | ||
Cash paid for income taxes | 21,720 | 6,792 |
Cash paid for interest | 23,644 | 12,955 |
Noncash investing activities: | ||
Property and equipment included in accounts payable and other current liabilities | 596 | 718 |
Purchase of leaseholds in exchange for capital lease obligations | 389 | 0 |
Noncash financing activities: | ||
Repurchase of common stock included in accounts payable and other current liabilities | 0 | 5,763 |
Debt issuance costs included in accounts payable and other current liabilities | $ 0 | $ 396 |
Description of Business and Org
Description of Business and Organization | 3 Months Ended |
Mar. 26, 2016 | |
Text Block [Abstract] | |
Description of Business and Organization | Description of Business and Organization Dunkin’ Brands Group, Inc. (“DBGI”), together with its consolidated subsidiaries, is one of the world’s leading franchisors of restaurants serving coffee and baked goods, as well as ice cream, within the quick service restaurant segment of the restaurant industry. We develop, franchise, and license a system of both traditional and nontraditional quick service restaurants and, in limited circumstances, own and operate individual locations. Through our Dunkin’ Donuts brand, we develop and franchise restaurants featuring coffee, donuts, bagels, breakfast sandwiches, and related products. Through our Baskin-Robbins brand, we develop and franchise restaurants featuring ice cream, frozen beverages, and related products. Additionally, we distribute Baskin-Robbins ice cream products to Baskin-Robbins franchisees and licensees in certain international markets. Throughout these unaudited consolidated financial statements, “Dunkin’ Brands,” “the Company,” “we,” “us,” “our,” and “management” refer to DBGI and its consolidated subsidiaries taken as a whole. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 26, 2016 | |
Disclosure Summary Of Significant Accounting Policies Additional Information [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies (a) Unaudited Consolidated Financial Statements The consolidated balance sheet as of March 26, 2016 and the consolidated statements of operations, comprehensive income, and cash flows for the three months ended March 26, 2016 and March 28, 2015 are unaudited. The accompanying unaudited consolidated financial statements include the accounts of DBGI and its consolidated subsidiaries and have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial information. Accordingly, they do not include all of the information and footnotes required in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for complete financial statements. All significant transactions and balances between subsidiaries and affiliates have been eliminated in consolidation. In the opinion of management, all adjustments necessary for a fair presentation of such financial statements in accordance with U.S. GAAP have been recorded. Such adjustments consisted only of normal recurring items. These unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto for the fiscal year ended December 26, 2015 , included in the Company’s Annual Report on Form 10-K. (b) Fiscal Year The Company operates and reports financial information on a 52 - or 53 -week year on a 13 -week quarter basis with the fiscal year ending on the last Saturday in December and fiscal quarters ending on the 13th Saturday of each quarter (or 14th Saturday when applicable with respect to the fourth fiscal quarter). The data periods contained within the three-month periods ended March 26, 2016 and March 28, 2015 reflect the results of operations for the 13-week periods ended on those dates. Operating results for the three-month period ended March 26, 2016 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2016 . The data periods contained within the three- and twelve-month periods ending December 31, 2016 will reflect the results of operations for the 14-week and 53-week periods ending on those dates. (c) Restricted Cash In accordance with the Company’s securitized financing facility, certain cash accounts have been established in the name of Citibank, N.A. (the “Trustee”) for the benefit of the Trustee and the noteholders, and are restricted in their use. The Company holds restricted cash which primarily represents (i) cash collections held by the Trustee, (ii) interest, principal, and commitment fee reserves held by the Trustee related to the Company’s Notes (see note 4), and (iii) real estate reserves used to pay real estate obligations. Changes in restricted cash accounts are presented as either a component of cash flows from operating or financing activities in the consolidated statements of cash flows based on the nature of the restricted balance. (d) Fair Value of Financial Instruments Financial assets and liabilities are categorized, based on the inputs to the valuation technique, into a three-level fair value hierarchy. The fair value hierarchy gives the highest priority to the quoted prices in active markets for identical assets and liabilities and lowest priority to unobservable inputs. Observable market data, when available, is required to be used in making fair value measurements. When inputs used to measure fair value fall within different levels of the hierarchy, the level within which the fair value measurement is categorized is based on the lowest level input that is significant to the fair value measurement. Financial assets and liabilities measured at fair value on a recurring basis as of March 26, 2016 and December 26, 2015 are summarized as follows (in thousands): March 26, 2016 December 26, 2015 Significant other observable inputs (Level 2) Total Significant other observable inputs (Level 2) Total Assets: Company-owned life insurance $ 5,673 5,673 5,802 5,802 Total assets $ 5,673 5,673 5,802 5,802 Liabilities: Deferred compensation liabilities $ 9,676 9,676 9,068 9,068 Total liabilities $ 9,676 9,676 9,068 9,068 The deferred compensation liabilities relate to the Dunkin’ Brands, Inc. non-qualified deferred compensation plans (“NQDC Plans”), which allows for pre-tax deferral of compensation for certain qualifying employees and directors. Changes in the fair value of the deferred compensation liabilities are derived using quoted prices in active markets of the asset selections made by the participants. The deferred compensation liabilities are classified within Level 2, as defined under U.S. GAAP, because their inputs are derived principally from observable market data by correlation to hypothetical investments. The Company holds assets, which include company-owned life insurance policies, to partially offset the Company’s liabilities under the NQDC Plans. The changes in the fair value of any company-owned life insurance policies are derived using determinable cash surrender value. As such, the company-owned life insurance policies are classified within Level 2, as defined under U.S. GAAP. The carrying value and estimated fair value of long-term debt as of March 26, 2016 and December 26, 2015 were as follows (in thousands): March 26, 2016 December 26, 2015 Carrying value Estimated fair value Carrying value Estimated fair value Financial liabilities Long-term debt $ 2,440,909 2,416,141 2,445,600 2,443,687 The estimated fair value of our long-term debt is estimated primarily based on current market rates for debt with similar terms and remaining maturities or current bid prices for our long-term debt. Judgment is required to develop these estimates. As such, our long-term debt is classified within Level 2, as defined under U.S. GAAP. (e) Concentration of Credit Risk The Company is subject to credit risk through its accounts receivable consisting primarily of amounts due from franchisees and licensees for franchise fees, royalty income, and sales of ice cream and other products. In addition, we have note and lease receivables from certain of our franchisees and licensees. The financial condition of these franchisees and licensees is largely dependent upon the underlying business trends of our brands and market conditions within the quick service restaurant industry. This concentration of credit risk is mitigated, in part, by the large number of franchisees and licensees of each brand and the short-term nature of the franchise and license fee and lease receivables. As of March 26, 2016 and December 26, 2015 , one master licensee, including its majority-owned subsidiaries, accounted for approximately 23% and 13% , respectively, of total accounts and notes receivable. No individual franchisee or master licensee accounted for more than 10% of total revenues for the three months ended March 26, 2016 or March 28, 2015 . Additionally, the Company engages various third parties to manufacture and/or distribute certain Dunkin’ Donuts and Baskin-Robbins products under licensing arrangements. As of December 26, 2015 , net receivables for one of these third parties accounted for approximately 13% of total accounts and notes receivable. No third party receivables accounted for more than 10% of total accounts and notes receivable as of March 26, 2016 . (f) Recent Accounting Pronouncements In March 2016, the Financial Accounting Standards Board (the “FASB”) issued new guidance for employee share-based compensation which simplifies several aspects of accounting for share-based payment transactions, including excess tax benefits, forfeiture estimates, statutory tax withholding requirements, and classification in the statements of cash flows. This guidance is effective for the Company in fiscal year 2017 with early adoption permitted. The Company expects to adopt this new guidance in fiscal year 2017. Upon adoption, any future excess tax benefits or deficiencies will be recorded to the provision for income taxes in the consolidated statements of operations, instead of additional paid-in capital in the consolidated balance sheets. During fiscal year 2015 and the three months ended March 26, 2016, $11.5 million and $538 thousand , respectively, of excess tax benefits were recorded to additional paid-in capital that would have been recorded as a reduction to the provision for income taxes if this new guidance had been adopted as of the respective dates. The Company is further evaluating the impact the adoption of this new standard will have on the Company’s accounting policies, consolidated financial statements, and related disclosures, as well as the transition methods. In March 2016, the FASB issued new guidance related to the recognition of breakage for certain prepaid stored-value products which requires breakage for those liabilities to be recognized in a way that is consistent with how it will be recognized under the new revenue recognition guidance, eliminating any current or future diversity in practice. This guidance is effective for the Company in fiscal year 2018 with early adoption permitted. The Company does not expect the adoption of this guidance to have any impact on the Company’s consolidated financial statements. In February 2016, the FASB issued a new standard for lease accounting, which replaces existing lease guidance. The new standard aims to increase transparency and comparability among organizations by requiring lessees to recognize lease assets and lease liabilities on the balance sheet and requiring disclosure of key information about leasing arrangements. This standard is effective for the Company in fiscal year 2019 with early adoption permitted, and modified retrospective application is required. The Company expects to adopt this new standard in fiscal year 2019 and is currently evaluating the impact the adoption of this new standard will have on the Company’s consolidated financial statements and related disclosures. The Company expects that most of its operating lease commitments will be subject to the new standard and recognized as operating lease liabilities and right-of-use assets upon adoption. In May 2014, the FASB issued a new standard for revenue recognition related to contracts with customers, except for contracts within the scope of other standards, which supersedes nearly all existing revenue recognition guidance. The new standard provides a single framework in which revenue is required to be recognized to depict the transfer of goods or services to customers in amounts that reflect the consideration to which a company expects to be entitled in exchange for those goods or services. The new standard is effective for the Company in fiscal year 2018 with early adoption permitted in fiscal year 2017. The Company expects to adopt this new standard in fiscal year 2018 and is currently evaluating the impact the adoption of this new standard will have on the Company’s accounting policies, consolidated financial statements, and related disclosures, and has not yet selected a transition method. (g) Reclassifications The Company has revised the presentation of revenues and related costs from the sale of Dunkin’ Donuts products in certain international markets within the consolidated statements of operations due to the growth in and the nature of such transactions. To conform to the current period presentation, revenues totaling $477 thousand have been reclassified from other revenues to sales of ice cream and other products and expenses totaling $467 thousand have been reclassified from general and administrative expenses, net to cost of ice cream and other products for the three months ended March 28, 2015. There was no impact to total revenues, total operating costs and expenses, operating income, income before income taxes, or net income as a result of these reclassifications. (h) Subsequent Events Subsequent events have been evaluated through the date these consolidated financial statements were filed. |
Franchise Fees and Royalty Inco
Franchise Fees and Royalty Income | 3 Months Ended |
Mar. 26, 2016 | |
Disclosure Franchise Fees And Royalty Income [Abstract] | |
Franchise Fees and Royalty Income | Franchise Fees and Royalty Income Franchise fees and royalty income consisted of the following (in thousands): Three months ended March 26, March 28, Royalty income $ 113,366 106,121 Initial franchise fees and renewal income 10,417 9,204 Total franchise fees and royalty income $ 123,783 115,325 The changes in franchised and company-operated points of distribution were as follows: Three months ended March 26, March 28, Systemwide Points of Distribution: Franchised points of distribution in operation—beginning of period 19,308 18,821 Franchised points of distribution—opened 301 298 Franchised points of distribution—closed (189 ) (219 ) Net transfers from (to) company-operated points of distribution 10 (2 ) Franchised points of distribution in operation—end of period 19,430 18,898 Company-operated points of distribution—end of period 41 43 Total systemwide points of distribution—end of period 19,471 18,941 |
Debt
Debt | 3 Months Ended |
Mar. 26, 2016 | |
Debt Disclosure [Abstract] | |
Debt | Debt Securitized Financing Facility In January 2015, DB Master Finance LLC (the “Master Issuer”), a limited-purpose, bankruptcy-remote, wholly-owned indirect subsidiary of DBGI, entered into a base indenture and a related supplemental indenture (collectively, the “Indenture”) under which the Master Issuer may issue multiple series of notes. On the same date, the Master Issuer issued Series 2015-1 3.262% Fixed Rate Senior Secured Notes, Class A-2-I (the “Class A-2-I Notes”) with an initial principal amount of $750.0 million and Series 2015-1 3.980% Fixed Rate Senior Secured Notes, Class A-2-II (the “Class A-2-II Notes” and, together with the Class A-2-I Notes, the “Class A-2 Notes”) with an initial principal amount of $1.75 billion . In addition, the Master Issuer issued Series 2015-1 Variable Funding Senior Secured Notes, Class A-1 (the “Variable Funding Notes” and, together with the Class A-2 Notes, the “Notes”), which allow the Master Issuer to borrow up to $100.0 million on a revolving basis. The Variable Funding Notes may also be used to issue letters of credit. The Notes were issued in a securitization transaction pursuant to which most of the Company’s domestic and certain of its foreign revenue-generating assets, consisting principally of franchise-related agreements, real estate assets, and intellectual property and license agreements for the use of intellectual property, are held by the Master Issuer and certain other limited-purpose, bankruptcy-remote, wholly-owned indirect subsidiaries of the Company that act as guarantors of the Notes and that have pledged substantially all of their assets to secure the Notes. The legal final maturity date of the Class A-2 Notes is in February 2045 , but it is anticipated that, unless earlier prepaid to the extent permitted under the Indenture, the Class A-2-I Notes will be repaid in February 2019 and the Class A-2-II Notes will be repaid in February 2022 (the “Anticipated Repayment Dates”). If the Class A-2 Notes have not been repaid in full by their respective Anticipated Repayment Dates, a rapid amortization event will occur in which residual net cash flows of the Master Issuer, after making certain required payments, will be applied to the outstanding principal of the Class A-2 Notes. Various other events, including failure to maintain a minimum ratio of net cash flows to debt service (“DSCR”), may also cause a rapid amortization event. Borrowings under the Class A-2-I and Class A-2-II Notes bear interest at a fixed rate equal to 3.262% and 3.980% , respectively. If the Class A-2 Notes are not repaid or refinanced prior to their respective Anticipated Repayment Dates, incremental interest will accrue. Principal payments are required to be made on the Class A-2-I and Class A-2-II Notes equal to $7.5 million and $17.5 million , respectively, per calendar year, payable in quarterly installments. No principal payments will be required if a specified leverage ratio, which is a measure of outstanding debt to earnings before interest, taxes, depreciation, and amortization, adjusted for certain items (as specified in the Indenture), is less than or equal to 5.0 to 1.0. Other events and transactions, such as certain asset sales and receipt of various insurance or indemnification proceeds, may trigger additional mandatory prepayments. It is anticipated that the principal and interest on the Variable Funding Notes will be repaid in full on or prior to February 2020 , subject to two additional one-year extensions. Borrowings under the Variable Funding Notes bear interest at a rate equal to a base rate, a LIBOR rate plus 2.25% , or the lenders’ commercial paper funding rate plus 2.25% . If the Variable Funding Notes are not repaid prior to February 2020 or prior to the end of an extension period, if applicable, incremental interest will accrue. In addition, the Company is required to pay a 2.25% fee for letters of credit amounts outstanding and a commitment fee on the unused portion of the Variable Funding Notes which ranges from 0.50% to 1.00% based on utilization. As of March 26, 2016 , approximately $742.5 million and $1.73 billion of principal were outstanding on the Class A-2-I Notes and Class A-2-II Notes, respectively. Total debt issuance costs incurred and capitalized in connection with the issuance of the Notes were $41.3 million . The effective interest rate, including the amortization of debt issuance costs, was 3.5% and 4.3% for the Class A-2-I Notes and Class A-2-II Notes, respectively, as of March 26, 2016 . As of March 26, 2016 , $25.9 million of letters of credit were outstanding against the Variable Funding Notes, which relate primarily to interest reserves required under the Indenture. There were no amounts drawn down on these letters of credit as of March 26, 2016 . The Notes are subject to a series of covenants and restrictions customary for transactions of this type, including (i) that the Master Issuer maintains specified reserve accounts to be used to make required payments in respect of the Notes, (ii) provisions relating to optional and mandatory prepayments, including mandatory prepayments in the event of a change of control as defined in the Indenture and the related payment of specified amounts, including specified make-whole payments in the case of the Class A-2 Notes under certain circumstances, (iii) certain indemnification payments in the event, among other things, the assets pledged as collateral for the Notes are in stated ways defective or ineffective, and (iv) covenants relating to recordkeeping, access to information, and similar matters. As noted above, the Notes are also subject to customary rapid amortization events provided for in the Indenture, including events tied to failure to maintain stated DSCR, failure to maintain an aggregate level of Dunkin’ Donuts U.S. retail sales on certain measurement dates, certain manager termination events, an event of default, and the failure to repay or refinance the Class A-2 Notes on the applicable scheduled maturity date. The Notes are also subject to certain customary events of default, including events relating to non-payment of required interest, principal, or other amounts due on or with respect to the Notes, failure to comply with covenants within certain time frames, certain bankruptcy events, breaches of specified representations and warranties, failure of security interests to be effective, and certain judgments. Senior Credit Facility During the three months ended March 28, 2015 , the Company recorded a loss on debt extinguishment of $20.6 million , consisting primarily of the write-off of the remaining original issuance discount and debt issuance costs related to the senior credit facility. |
Derivative Instruments and Hedg
Derivative Instruments and Hedging Transactions | 3 Months Ended |
Mar. 26, 2016 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Instruments and Hedging Transactions | Derivative Instruments and Hedging Transactions In December 2014, the Company terminated all interest rate swap agreements with its counterparties. The total fair value of the interest rate swaps at the termination date was $6.3 million , excluding accrued interest owed to the counterparties of $1.0 million . Upon termination, cash flow hedge accounting was discontinued and the cumulative pre-tax gain was recorded in accumulated other comprehensive loss, which is being amortized on a straight-line basis to interest expense in the consolidated statements of operations through November 23, 2017, the original maturity date of the swaps. As of March 26, 2016 and December 26, 2015 , a pre-tax gain of $3.6 million and $4.1 million , respectively, was recorded in accumulated other comprehensive loss. During the next twelve months, the Company estimates that $2.2 million will be reclassified from accumulated other comprehensive loss as a reduction of interest expense. The table below summarizes the effects of derivative instruments on the consolidated statements of operations and comprehensive income, which were equivalent for the three months ended March 26, 2016 and March 28, 2015 (in thousands): Three months ended March 26, 2016 and March 28, 2015 Derivatives designated as cash flow hedging instruments Amount of net gain (loss) reclassified into earnings Consolidated statement of operations classification Total effect on other comprehensive income Interest rate swaps $ 535 Interest expense $ (535 ) Income tax effect (217 ) Provision for income taxes 217 Net of income taxes $ 318 $ (318 ) |
Other Current Liabilities
Other Current Liabilities | 3 Months Ended |
Mar. 26, 2016 | |
Other Liabilities, Current [Abstract] | |
Other Current Liabilities | Other Current Liabilities Other current liabilities consisted of the following (in thousands): March 26, December 26, Gift card/certificate liability $ 123,067 176,080 Gift card breakage liability 23,816 23,955 Accrued payroll and benefits 14,546 29,540 Accrued legal liabilities (see note 10(c)) 19,188 18,267 Accrued interest 9,444 9,522 Accrued professional costs 2,788 4,814 Franchisee profit-sharing liability 3,391 8,406 Other 23,318 22,275 Total other current liabilities $ 219,558 292,859 The decrease in the gift card/certificate liability was driven by the seasonality of our gift card program. The decrease in accrued payroll and benefits was primarily due to incentive compensation payments made during the three months ended March 26, 2016 related to fiscal year 2015. |
Segment Information
Segment Information | 3 Months Ended |
Mar. 26, 2016 | |
Segment Reporting [Abstract] | |
Segment Information | Segment Information The Company is strategically aligned into two global brands, Dunkin’ Donuts and Baskin-Robbins, which are further segregated between U.S. operations and international operations. As such, the Company has determined that it has four operating segments, which are its reportable segments: Dunkin’ Donuts U.S., Dunkin’ Donuts International, Baskin-Robbins U.S., and Baskin-Robbins International. Dunkin’ Donuts U.S., Baskin-Robbins U.S., and Dunkin’ Donuts International primarily derive their revenues through royalty income and franchise fees. Baskin-Robbins U.S. also derives revenue through license fees from a third-party license agreement and rental income. Dunkin’ Donuts U.S. also derives revenue through retail sales at company-operated restaurants and rental income. Baskin-Robbins International primarily derives its revenues from the sales of ice cream and other products, as well as royalty income, franchise fees, and license fees. The operating results of each segment are regularly reviewed and evaluated separately by the Company’s senior management, which includes, but is not limited to, the chief executive officer. Senior management primarily evaluates the performance of its segments and allocates resources to them based on operating income adjusted for amortization of intangible assets, long-lived asset impairment charges, and other infrequent or unusual charges, which does not reflect the allocation of any corporate charges. This profitability measure is referred to as segment profit. When senior management reviews a balance sheet, it is at a consolidated level. The accounting policies applicable to each segment are consistent with those used in the consolidated financial statements. Beginning in the first quarter of fiscal year 2016, certain segment profit amounts in the tables below have been reclassified as a result of the realignment of the Company’s organizational structure to better support its segment operations, including the allocation of previously unallocated costs. Additionally, revenues and segment profit amounts related to restaurants located in Puerto Rico were previously included in the Baskin-Robbins International segment, but are now included in the Baskin-Robbins U.S. segment based on functional responsibility. Prior period amounts in the tables below have been revised to reflect these changes for all periods presented. Revenues for all operating segments include only transactions with unaffiliated customers and include no intersegment revenues. Revenues reported as “Other” include revenues earned through certain licensing arrangements with third parties in which our brand names are used, including the licensing fees earned from the Dunkin’ K-Cup® pod licensing agreement, revenues generated from online training programs for franchisees, and revenues from the sale of Dunkin’ Donuts products in certain international markets, all of which are not allocated to a specific segment. Revenues by segment were as follows (in thousands): Revenues Three months ended March 26, March 28, Dunkin’ Donuts U.S. $ 138,813 133,867 Dunkin’ Donuts International 7,250 6,578 Baskin-Robbins U.S. 10,561 10,309 Baskin-Robbins International 26,834 23,130 Total reportable segment revenues 183,458 173,884 Other 6,318 12,021 Total revenues $ 189,776 185,905 Amounts included in “Corporate” in the segment profit table below include corporate overhead costs, such as payroll and related benefit costs and professional services, net of “Other” revenues reported above. Segment profit by segment was as follows (in thousands): Segment profit Three months ended March 26, March 28, Dunkin’ Donuts U.S. $ 100,444 93,714 Dunkin’ Donuts International 3,758 3,674 Baskin-Robbins U.S. 7,300 6,088 Baskin-Robbins International 8,384 7,057 Total reportable segments 119,886 110,533 Corporate (28,699 ) (20,329 ) Interest expense, net (24,732 ) (22,042 ) Amortization of other intangible assets (5,761 ) (6,200 ) Long-lived asset impairment charges (93 ) (264 ) Loss on debt extinguishment and refinancing transactions — (20,554 ) Other losses, net (370 ) (545 ) Income before income taxes $ 60,231 40,599 Net income of equity method investments is included in segment profit for the Dunkin’ Donuts International and Baskin-Robbins International reportable segments. Amounts reported as “Other” in the segment profit table below include the reduction in depreciation and amortization, net of tax, reported by our equity method investees as a result of previously recorded impairment charges. Net income of equity method investments by reportable segment was as follows (in thousands): Net income of equity method investments Three months ended March 26, March 28, Dunkin’ Donuts International $ 174 289 Baskin-Robbins International 2,075 2,565 Total reportable segments 2,249 2,854 Other 715 93 Total net income of equity method investments $ 2,964 2,947 |
Stockholders_ Equity (Deficit)
Stockholders’ Equity (Deficit) and Redeemable Noncontrolling Interests | 3 Months Ended |
Mar. 26, 2016 | |
Stockholders' Equity Note [Abstract] | |
Stockholders' Equity | Stockholders’ Deficit The changes in total stockholders’ deficit were as follows (in thousands): Total stockholders’ deficit Balance as of December 26, 2015 $ (220,743 ) Net income 37,154 Other comprehensive income 1,914 Dividends paid on common stock (27,395 ) Exercise of stock options 1,086 Repurchases of common stock (30,000 ) Share-based compensation expense 4,140 Excess tax benefits from share-based compensation 538 Deconsolidation of noncontrolling interest (208 ) Other, net (1,078 ) Balance as of March 26, 2016 $ (234,592 ) (a) Treasury Stock On October 22, 2015, the Company entered into an accelerated share repurchase agreement (the “October 2015 ASR Agreement”) with a third-party financial institution. Pursuant to the terms of the October 2015 ASR Agreement, the Company paid the financial institution $125.0 million in cash and received an initial delivery of 2,527,167 shares of the Company’s common stock in fiscal year 2015, representing an estimate of 80% of the total shares expected to be delivered under the October 2015 ASR Agreement. Upon final settlement of the October 2015 ASR Agreement during the three months ended March 26, 2016 , the Company received an additional delivery of 483,913 shares of its common stock based on a weighted average cost per share of $41.51 over the term of the October 2015 ASR Agreement. On February 4, 2016, the Company entered into an accelerated share repurchase agreement (the “February 2016 ASR Agreement”) with a third-party financial institution. Pursuant to the terms of the February 2016 ASR Agreement, the Company paid the financial institution $30.0 million in cash and received 702,239 shares of the Company’s common stock during the three months ended March 26, 2016 based on a weighted average cost per share of $42.72 over the term of the February 2016 ASR Agreement. The Company accounts for treasury stock under the cost method, and as such recorded an increase in common treasury stock of $55.0 million during the three months ended March 26, 2016 for the shares repurchased under the accelerated share repurchase agreements, based on the cost of the shares on the dates of repurchase and any direct costs incurred. During the three months ended March 26, 2016 , the Company retired 1,186,152 shares of treasury stock, resulting in decreases in treasury stock and additional paid-in capital of $55.0 million and $11.3 million , respectively, and an increase in accumulated deficit of $43.7 million . (b) Equity Incentive Plans During the three months ended March 26, 2016 , the Company granted stock options to purchase 1,384,294 shares of common stock and 73,794 restricted stock units (“RSUs”) to certain employees. The stock options generally vest in equal annual amounts over a four -year period subsequent to the grant date, and have a maximum contractual term of seven years. The stock options were granted with an exercise price of $44.35 per share and have a weighted average grant-date fair value of $7.40 per share. The RSUs granted to employees vest in equal annual amounts over a three -year period subsequent to the grant date and have a weighted average grant-date fair value of $41.76 per share. In addition, the Company granted 92,487 performance stock units (“PSUs”) to certain employees during the three months ended March 26, 2016. These PSUs are eligible to vest on February 23, 2019, subject to two separate vesting conditions. Of the total PSUs granted, 39,684 PSUs are subject to a service condition and a market vesting condition linked to the level of total shareholder return received by the Company’s shareholders during the performance period measured against the companies in the S&P 500 Composite Index (“TSR PSUs”). The remaining 52,803 PSUs granted are subject to a service condition and a performance vesting condition linked to adjusted operating income growth over the performance period (“AOI PSUs”). The maximum vesting percentage that could be realized for each of the TSR PSUs and the AOI PSUs is 200% based on the level of performance achieved for the respective awards. All of the PSUs are also subject to a one-year post-vesting holding period. The TSR PSUs were valued based on a Monte Carlo simulation model to reflect the impact of the total shareholder return market condition, resulting in a grant-date fair value of $55.36 per share. The AOI PSUs have a grant-date fair value of $41.61 per share. Total compensation expense related to all share-based awards was $4.1 million and $3.7 million for the three months ended March 26, 2016 and March 28, 2015 , respectively, and is included in general and administrative expenses, net in the consolidated statements of operations. (c) Accumulated Other Comprehensive Loss The changes in the components of accumulated other comprehensive loss were as follows (in thousands): Effect of foreign currency translation Unrealized gains on interest rate swaps Other Accumulated other comprehensive gain (loss) Balance as of December 26, 2015 $ (20,459 ) 2,443 (2,030 ) (20,046 ) Other comprehensive income (loss), net 2,257 (318 ) (25 ) 1,914 Balance as of March 26, 2016 $ (18,202 ) 2,125 (2,055 ) (18,132 ) (d) Dividends The Company paid a quarterly dividend of $0.30 per share of common stock on March 16, 2016 totaling approximately $27.4 million . On April 28, 2016 , the Company announced that its board of directors approved the next quarterly dividend of $0.30 per share of common stock payable June 8, 2016 to shareholders of record at the close of business on May 31, 2016 . |
Earnings per Share
Earnings per Share | 3 Months Ended |
Mar. 26, 2016 | |
Earnings Per Share [Abstract] | |
Earnings per Share | Earnings per Share The computation of basic and diluted earnings per common share is as follows: Three months ended March 26, March 28, Net income attributable to Dunkin’ Brands—basic and diluted (in thousands) $ 37,154 25,631 Weighted average number of common shares: Common—basic 91,684,844 100,271,701 Common—diluted 92,618,269 101,502,438 Earnings per common share: Common—basic $ 0.41 0.26 Common—diluted 0.40 0.25 The weighted average number of common shares in the common diluted earnings per share calculation includes the dilutive effect of 933,425 and 1,230,737 equity awards for the three months ended March 26, 2016 and March 28, 2015 , respectively, using the treasury stock method. The weighted average number of common shares in the common diluted earnings per share calculation for all periods excludes all contingently issuable equity awards for which the contingent vesting criteria were not yet met as of the fiscal period end. As of March 26, 2016 and March 28, 2015 , there were 150,000 restricted shares that were contingently issuable and for which the contingent vesting criteria were not yet met as of the fiscal period end. Additionally, the weighted average number of common shares in the common diluted earnings per share calculation excludes 4,512,079 and 3,084,195 equity awards for the three months ended March 26, 2016 and March 28, 2015 , respectively, as they would be antidilutive. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 26, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies (a) Guarantees Financial Guarantees The Company has established agreements with certain financial institutions whereby the Company’s franchisees can obtain financing with terms of approximately 3 to 10 years for various business purposes. Substantially all loan proceeds are used by the franchisees to finance store improvements, new store development, new central production locations, equipment purchases, related business acquisition costs, working capital, and other costs. In limited instances, the Company guarantees a portion of the payments and commitments of the franchisees, which is collateralized by the store equipment owned by the franchisee. Under the terms of the agreements, in the event that all outstanding borrowings come due simultaneously, the Company would be contingently liable for $1.9 million and $2.0 million as of March 26, 2016 and December 26, 2015 , respectively. As of March 26, 2016 and December 26, 2015 , there were no amounts under such guarantees that were due. The Company assesses the risk of performing under these guarantees for each franchisee relationship on a quarterly basis. As of March 26, 2016 , the Company recorded an immaterial amount of reserves for such guarantees. No reserves were recorded as of December 26, 2015 . Supply Chain Guarantees The Company has various supply chain agreements that provide for purchase commitments, the majority of which result in the Company being contingently liable upon early termination of the agreement. As of March 26, 2016 and December 26, 2015 , the Company was contingently liable under such supply chain agreements for approximately $152.5 million and $157.8 million , respectively. For certain supply chain commitments, as product is purchased by the Company’s franchisees over the term of the agreement, the amount of the guarantee is reduced. The Company assesses the risk of performing under each of these guarantees on a quarterly basis, and, based on various factors including internal forecasts, prior history, and ability to extend contract terms, there was no accrual required as of March 26, 2016 or December 26, 2015 related to these commitments. Lease Guarantees The Company is contingently liable on certain lease agreements typically resulting from assigning our interest in obligations under property leases as a condition of refranchising certain restaurants and the guarantee of certain other leases. These leases have varying terms, the latest of which expires in 2024 . As of March 26, 2016 and December 26, 2015 , the potential amount of undiscounted payments the Company could be required to make in the event of nonpayment by the primary lessee was $3.6 million and $3.7 million , respectively. Our franchisees are the primary lessees under the majority of these leases. The Company generally has cross-default provisions with these franchisees that would put them in default of their franchise agreement in the event of nonpayment under the lease. We believe these cross-default provisions significantly reduce the risk that we will be required to make payments under these leases. Accordingly, we do not believe it is probable that the Company will be required to make payments under such leases, and we have not recorded a liability for such contingent liabilities. (b) Letters of Credit As of March 26, 2016 and December 26, 2015 , the Company had standby letters of credit outstanding for a total of $25.9 million and $26.3 million , respectively. There were no amounts drawn down on these letters of credit as of March 26, 2016 and December 26, 2015 . (c) Legal Matters In May 2003, a group of Dunkin’ Donuts franchisees from Quebec, Canada filed a lawsuit against the Company on a variety of claims, including but not limited to, alleging that the Company breached its franchise agreements and provided inadequate management and support to Dunkin’ Donuts franchisees in Quebec (the “Bertico litigation”). In June 2012, the Quebec Superior Court found for the plaintiffs and issued a judgment against the Company in the amount of approximately C$16.4 million , plus costs and interest, representing loss in value of the franchises and lost profits. The Company appealed the decision, and in April 2015, the Quebec Court of Appeals (Montreal) ruled to reduce the damages to approximately C $10.9 million , plus costs and interest. The Company sought leave to appeal the decision with the Supreme Court of Canada, but was denied in March 2016. Similar claims have also been made against the Company by other former Dunkin’ Donuts franchisees in Canada. As a result of the Bertico litigation appellate ruling and assessment of similar claims, the Company reduced its aggregate legal reserves for the Bertico litigation and similar claims by approximately $2.8 million during the three months ended March 28, 2015 , which is recorded within general and administrative expenses, net in the consolidated statements of operations. No amounts have yet been paid with respect to these matters, and an estimated liability of $19.0 million is recorded within other current liabilities in the consolidated balance sheets as of March 26, 2016 . Additionally, the Company is engaged in several matters of litigation arising in the ordinary course of its business as a franchisor. Such matters include disputes related to compliance with the terms of franchise and development agreements, including claims or threats of claims of breach of contract, negligence, and other alleged violations by the Company. As of March 26, 2016 and December 26, 2015 , no material amounts, excluding the Bertico litigation and related matters, have been recorded in connection with any litigation. |
Related-Party Transactions
Related-Party Transactions | 3 Months Ended |
Mar. 26, 2016 | |
Related Party Transactions [Abstract] | |
Related-Party Transactions | Related-Party Transactions (a) Advertising Funds As of March 26, 2016 and December 26, 2015 , the Company had a net payable of $5.2 million and $11.6 million , respectively, to the various advertising funds. To cover administrative expenses of the advertising funds, the Company charges each advertising fund a management fee for items such as facilities, accounting services, information technology, data processing, product development, legal, administrative support services, and other operating expenses, as well as share-based compensation expense for employees that provide services directly to the advertising funds. Management fees totaled $2.4 million for each of the three months ended March 26, 2016 and March 28, 2015 . Such management fees are included in the consolidated statements of operations as a reduction in general and administrative expenses, net. Additionally, the Company made net contributions to the advertising funds based on retail sales at company-operated restaurants of $281 thousand and $265 thousand during the three months ended March 26, 2016 and March 28, 2015 , respectively, which are included in company-operated restaurant expenses in the consolidated statements of operations. The Company also funded advertising fund initiatives of $505 thousand and $512 thousand during the three months ended March 26, 2016 and March 28, 2015 , respectively, which were contributed from the gift card breakage liability included within other current liabilities in the consolidated balance sheets (see note 6). (b) Equity Method Investments The Company recognized royalty income from its equity method investees as follows (in thousands): Three months ended March 26, March 28, B-R 31 Ice Cream Co., Ltd. $ 321 242 BR-Korea Co., Ltd. 893 1,013 $ 1,214 1,255 As of March 26, 2016 and December 26, 2015 , the Company had $881 thousand and $1.1 million , respectively, of royalties receivable from its equity method investees, which were recorded in accounts receivable, net of allowance for doubtful accounts, in the consolidated balance sheets. The Company made net payments to its equity method investees totaling approximately $820 thousand and $998 thousand during the three months ended March 26, 2016 and March 28, 2015 , respectively, primarily for the purchase of ice cream and other products. As of March 26, 2016 and December 26, 2015 , the Company had $2.1 million of notes receivable from Coffee Alliance S.L., an equity method investee, which were fully reserved as of the respective dates. The notes receivable, net of the reserve, are included in other assets in the consolidated balance sheets. The Company recognized $463 thousand and $449 thousand during the three months ended March 26, 2016 and March 28, 2015 , respectively, in the consolidated statements of operations from the sale of ice cream and other products to Palm Oasis Ventures Pty. Ltd. (“Australia JV”), of which the Company owns a 20% equity interest. As of March 26, 2016 and December 26, 2015 , the Company had $2.5 million and $3.1 million , respectively, of net receivables from the Australia JV, consisting of accounts receivable and notes and other receivables, net of current liabilities. |
Summary of Significant Accoun19
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 26, 2016 | |
Disclosure Summary Of Significant Accounting Policies Additional Information [Abstract] | |
Unaudited Financial Statements | Unaudited Consolidated Financial Statements The consolidated balance sheet as of March 26, 2016 and the consolidated statements of operations, comprehensive income, and cash flows for the three months ended March 26, 2016 and March 28, 2015 are unaudited. The accompanying unaudited consolidated financial statements include the accounts of DBGI and its consolidated subsidiaries and have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial information. Accordingly, they do not include all of the information and footnotes required in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for complete financial statements. All significant transactions and balances between subsidiaries and affiliates have been eliminated in consolidation. In the opinion of management, all adjustments necessary for a fair presentation of such financial statements in accordance with U.S. GAAP have been recorded. Such adjustments consisted only of normal recurring items. These unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto for the fiscal year ended December 26, 2015 , included in the Company’s Annual Report on Form 10-K. |
Fiscal Year | Fiscal Year The Company operates and reports financial information on a 52 - or 53 -week year on a 13 -week quarter basis with the fiscal year ending on the last Saturday in December and fiscal quarters ending on the 13th Saturday of each quarter (or 14th Saturday when applicable with respect to the fourth fiscal quarter). The data periods contained within the three-month periods ended March 26, 2016 and March 28, 2015 reflect the results of operations for the 13-week periods ended on those dates. Operating results for the three-month period ended March 26, 2016 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2016 . The data periods contained within the three- and twelve-month periods ending December 31, 2016 will reflect the results of operations for the 14-week and 53-week periods ending on those dates. |
Restricted Cash | Restricted Cash In accordance with the Company’s securitized financing facility, certain cash accounts have been established in the name of Citibank, N.A. (the “Trustee”) for the benefit of the Trustee and the noteholders, and are restricted in their use. The Company holds restricted cash which primarily represents (i) cash collections held by the Trustee, (ii) interest, principal, and commitment fee reserves held by the Trustee related to the Company’s Notes (see note 4), and (iii) real estate reserves used to pay real estate obligations. Changes in restricted cash accounts are presented as either a component of cash flows from operating or financing activities in the consolidated statements of cash flows based on the nature of the restricted balance. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments Financial assets and liabilities are categorized, based on the inputs to the valuation technique, into a three-level fair value hierarchy. The fair value hierarchy gives the highest priority to the quoted prices in active markets for identical assets and liabilities and lowest priority to unobservable inputs. Observable market data, when available, is required to be used in making fair value measurements. When inputs used to measure fair value fall within different levels of the hierarchy, the level within which the fair value measurement is categorized is based on the lowest level input that is significant to the fair value measurement. Financial assets and liabilities measured at fair value on a recurring basis as of March 26, 2016 and December 26, 2015 are summarized as follows (in thousands): March 26, 2016 December 26, 2015 Significant other observable inputs (Level 2) Total Significant other observable inputs (Level 2) Total Assets: Company-owned life insurance $ 5,673 5,673 5,802 5,802 Total assets $ 5,673 5,673 5,802 5,802 Liabilities: Deferred compensation liabilities $ 9,676 9,676 9,068 9,068 Total liabilities $ 9,676 9,676 9,068 9,068 The deferred compensation liabilities relate to the Dunkin’ Brands, Inc. non-qualified deferred compensation plans (“NQDC Plans”), which allows for pre-tax deferral of compensation for certain qualifying employees and directors. Changes in the fair value of the deferred compensation liabilities are derived using quoted prices in active markets of the asset selections made by the participants. The deferred compensation liabilities are classified within Level 2, as defined under U.S. GAAP, because their inputs are derived principally from observable market data by correlation to hypothetical investments. The Company holds assets, which include company-owned life insurance policies, to partially offset the Company’s liabilities under the NQDC Plans. The changes in the fair value of any company-owned life insurance policies are derived using determinable cash surrender value. As such, the company-owned life insurance policies are classified within Level 2, as defined under U.S. GAAP. The carrying value and estimated fair value of long-term debt as of March 26, 2016 and December 26, 2015 were as follows (in thousands): March 26, 2016 December 26, 2015 Carrying value Estimated fair value Carrying value Estimated fair value Financial liabilities Long-term debt $ 2,440,909 2,416,141 2,445,600 2,443,687 The estimated fair value of our long-term debt is estimated primarily based on current market rates for debt with similar terms and remaining maturities or current bid prices for our long-term debt. Judgment is required to develop these estimates. As such, our long-term debt is classified within Level 2, as defined under U.S. GAAP. |
Concentration of Credit Risk | Concentration of Credit Risk The Company is subject to credit risk through its accounts receivable consisting primarily of amounts due from franchisees and licensees for franchise fees, royalty income, and sales of ice cream and other products. In addition, we have note and lease receivables from certain of our franchisees and licensees. The financial condition of these franchisees and licensees is largely dependent upon the underlying business trends of our brands and market conditions within the quick service restaurant industry. This concentration of credit risk is mitigated, in part, by the large number of franchisees and licensees of each brand and the short-term nature of the franchise and license fee and lease receivables. As of March 26, 2016 and December 26, 2015 , one master licensee, including its majority-owned subsidiaries, accounted for approximately 23% and 13% , respectively, of total accounts and notes receivable. No individual franchisee or master licensee accounted for more than 10% of total revenues for the three months ended March 26, 2016 or March 28, 2015 . Additionally, the Company engages various third parties to manufacture and/or distribute certain Dunkin’ Donuts and Baskin-Robbins products under licensing arrangements. As of December 26, 2015 , net receivables for one of these third parties accounted for approximately 13% of total accounts and notes receivable. No third party receivables accounted for more than 10% of total accounts and notes receivable as of March 26, 2016 . |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In March 2016, the Financial Accounting Standards Board (the “FASB”) issued new guidance for employee share-based compensation which simplifies several aspects of accounting for share-based payment transactions, including excess tax benefits, forfeiture estimates, statutory tax withholding requirements, and classification in the statements of cash flows. This guidance is effective for the Company in fiscal year 2017 with early adoption permitted. The Company expects to adopt this new guidance in fiscal year 2017. Upon adoption, any future excess tax benefits or deficiencies will be recorded to the provision for income taxes in the consolidated statements of operations, instead of additional paid-in capital in the consolidated balance sheets. During fiscal year 2015 and the three months ended March 26, 2016, $11.5 million and $538 thousand , respectively, of excess tax benefits were recorded to additional paid-in capital that would have been recorded as a reduction to the provision for income taxes if this new guidance had been adopted as of the respective dates. The Company is further evaluating the impact the adoption of this new standard will have on the Company’s accounting policies, consolidated financial statements, and related disclosures, as well as the transition methods. In March 2016, the FASB issued new guidance related to the recognition of breakage for certain prepaid stored-value products which requires breakage for those liabilities to be recognized in a way that is consistent with how it will be recognized under the new revenue recognition guidance, eliminating any current or future diversity in practice. This guidance is effective for the Company in fiscal year 2018 with early adoption permitted. The Company does not expect the adoption of this guidance to have any impact on the Company’s consolidated financial statements. In February 2016, the FASB issued a new standard for lease accounting, which replaces existing lease guidance. The new standard aims to increase transparency and comparability among organizations by requiring lessees to recognize lease assets and lease liabilities on the balance sheet and requiring disclosure of key information about leasing arrangements. This standard is effective for the Company in fiscal year 2019 with early adoption permitted, and modified retrospective application is required. The Company expects to adopt this new standard in fiscal year 2019 and is currently evaluating the impact the adoption of this new standard will have on the Company’s consolidated financial statements and related disclosures. The Company expects that most of its operating lease commitments will be subject to the new standard and recognized as operating lease liabilities and right-of-use assets upon adoption. In May 2014, the FASB issued a new standard for revenue recognition related to contracts with customers, except for contracts within the scope of other standards, which supersedes nearly all existing revenue recognition guidance. The new standard provides a single framework in which revenue is required to be recognized to depict the transfer of goods or services to customers in amounts that reflect the consideration to which a company expects to be entitled in exchange for those goods or services. The new standard is effective for the Company in fiscal year 2018 with early adoption permitted in fiscal year 2017. The Company expects to adopt this new standard in fiscal year 2018 and is currently evaluating the impact the adoption of this new standard will have on the Company’s accounting policies, consolidated financial statements, and related disclosures, and has not yet selected a transition method. |
Reclassifications | Reclassifications The Company has revised the presentation of revenues and related costs from the sale of Dunkin’ Donuts products in certain international markets within the consolidated statements of operations due to the growth in and the nature of such transactions. To conform to the current period presentation, revenues totaling $477 thousand have been reclassified from other revenues to sales of ice cream and other products and expenses totaling $467 thousand have been reclassified from general and administrative expenses, net to cost of ice cream and other products for the three months ended March 28, 2015. There was no impact to total revenues, total operating costs and expenses, operating income, income before income taxes, or net income as a result of these reclassifications. |
Subsequent Events | Subsequent Events Subsequent events have been evaluated through the date these consolidated financial statements were filed. |
Summary of Significant Accoun20
Summary of Significant Accounting Policies (Tables) | 3 Months Ended |
Mar. 26, 2016 | |
Disclosure Summary Of Significant Accounting Policies Additional Information [Abstract] | |
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis | Financial assets and liabilities measured at fair value on a recurring basis as of March 26, 2016 and December 26, 2015 are summarized as follows (in thousands): March 26, 2016 December 26, 2015 Significant other observable inputs (Level 2) Total Significant other observable inputs (Level 2) Total Assets: Company-owned life insurance $ 5,673 5,673 5,802 5,802 Total assets $ 5,673 5,673 5,802 5,802 Liabilities: Deferred compensation liabilities $ 9,676 9,676 9,068 9,068 Total liabilities $ 9,676 9,676 9,068 9,068 |
Schedule of Carrying Values and Estimated Fair Values of Debt Instruments | The carrying value and estimated fair value of long-term debt as of March 26, 2016 and December 26, 2015 were as follows (in thousands): March 26, 2016 December 26, 2015 Carrying value Estimated fair value Carrying value Estimated fair value Financial liabilities Long-term debt $ 2,440,909 2,416,141 2,445,600 2,443,687 |
Franchise Fees and Royalty In21
Franchise Fees and Royalty Income (Tables) | 3 Months Ended |
Mar. 26, 2016 | |
Disclosure Franchise Fees And Royalty Income [Abstract] | |
Schedule Of Franchise Revenue Table | Franchise fees and royalty income consisted of the following (in thousands): Three months ended March 26, March 28, Royalty income $ 113,366 106,121 Initial franchise fees and renewal income 10,417 9,204 Total franchise fees and royalty income $ 123,783 115,325 |
Changes in Franchised and Company-Owned Points of Distribution | The changes in franchised and company-operated points of distribution were as follows: Three months ended March 26, March 28, Systemwide Points of Distribution: Franchised points of distribution in operation—beginning of period 19,308 18,821 Franchised points of distribution—opened 301 298 Franchised points of distribution—closed (189 ) (219 ) Net transfers from (to) company-operated points of distribution 10 (2 ) Franchised points of distribution in operation—end of period 19,430 18,898 Company-operated points of distribution—end of period 41 43 Total systemwide points of distribution—end of period 19,471 18,941 |
Derivative Instruments and He22
Derivative Instruments and Hedging Transactions (Tables) | 3 Months Ended |
Mar. 26, 2016 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of Derivative Instruments, Gain (Loss) in Statement of Financial Performance | The table below summarizes the effects of derivative instruments on the consolidated statements of operations and comprehensive income, which were equivalent for the three months ended March 26, 2016 and March 28, 2015 (in thousands): Three months ended March 26, 2016 and March 28, 2015 Derivatives designated as cash flow hedging instruments Amount of net gain (loss) reclassified into earnings Consolidated statement of operations classification Total effect on other comprehensive income Interest rate swaps $ 535 Interest expense $ (535 ) Income tax effect (217 ) Provision for income taxes 217 Net of income taxes $ 318 $ (318 ) |
Other Current Liabilities (Tabl
Other Current Liabilities (Tables) | 3 Months Ended |
Mar. 26, 2016 | |
Other Liabilities, Current [Abstract] | |
Other Current Liabilities | Other current liabilities consisted of the following (in thousands): March 26, December 26, Gift card/certificate liability $ 123,067 176,080 Gift card breakage liability 23,816 23,955 Accrued payroll and benefits 14,546 29,540 Accrued legal liabilities (see note 10(c)) 19,188 18,267 Accrued interest 9,444 9,522 Accrued professional costs 2,788 4,814 Franchisee profit-sharing liability 3,391 8,406 Other 23,318 22,275 Total other current liabilities $ 219,558 292,859 |
Segment Information (Tables)
Segment Information (Tables) | 3 Months Ended |
Mar. 26, 2016 | |
Segment Reporting [Abstract] | |
Revenues by Segment | Revenues by segment were as follows (in thousands): Revenues Three months ended March 26, March 28, Dunkin’ Donuts U.S. $ 138,813 133,867 Dunkin’ Donuts International 7,250 6,578 Baskin-Robbins U.S. 10,561 10,309 Baskin-Robbins International 26,834 23,130 Total reportable segment revenues 183,458 173,884 Other 6,318 12,021 Total revenues $ 189,776 185,905 |
Segment Profit by Segment | Segment profit by segment was as follows (in thousands): Segment profit Three months ended March 26, March 28, Dunkin’ Donuts U.S. $ 100,444 93,714 Dunkin’ Donuts International 3,758 3,674 Baskin-Robbins U.S. 7,300 6,088 Baskin-Robbins International 8,384 7,057 Total reportable segments 119,886 110,533 Corporate (28,699 ) (20,329 ) Interest expense, net (24,732 ) (22,042 ) Amortization of other intangible assets (5,761 ) (6,200 ) Long-lived asset impairment charges (93 ) (264 ) Loss on debt extinguishment and refinancing transactions — (20,554 ) Other losses, net (370 ) (545 ) Income before income taxes $ 60,231 40,599 |
Equity in Net Income of Joint Ventures Reportable Segment | Net income of equity method investments by reportable segment was as follows (in thousands): Net income of equity method investments Three months ended March 26, March 28, Dunkin’ Donuts International $ 174 289 Baskin-Robbins International 2,075 2,565 Total reportable segments 2,249 2,854 Other 715 93 Total net income of equity method investments $ 2,964 2,947 |
Stockholders_ Equity (Deficit25
Stockholders’ Equity (Deficit) and Redeemable Noncontrolling Interests (Tables) | 3 Months Ended |
Mar. 26, 2016 | |
Stockholders' Equity Note [Abstract] | |
Schedule of Shareholders' Equity | The changes in total stockholders’ deficit were as follows (in thousands): Total stockholders’ deficit Balance as of December 26, 2015 $ (220,743 ) Net income 37,154 Other comprehensive income 1,914 Dividends paid on common stock (27,395 ) Exercise of stock options 1,086 Repurchases of common stock (30,000 ) Share-based compensation expense 4,140 Excess tax benefits from share-based compensation 538 Deconsolidation of noncontrolling interest (208 ) Other, net (1,078 ) Balance as of March 26, 2016 $ (234,592 ) |
Changes in Components of Accumulated Other Comprehensive Income | The changes in the components of accumulated other comprehensive loss were as follows (in thousands): Effect of foreign currency translation Unrealized gains on interest rate swaps Other Accumulated other comprehensive gain (loss) Balance as of December 26, 2015 $ (20,459 ) 2,443 (2,030 ) (20,046 ) Other comprehensive income (loss), net 2,257 (318 ) (25 ) 1,914 Balance as of March 26, 2016 $ (18,202 ) 2,125 (2,055 ) (18,132 ) |
Earnings per Share (Tables)
Earnings per Share (Tables) | 3 Months Ended |
Mar. 26, 2016 | |
Earnings Per Share [Abstract] | |
Computation of Basic and Diluted Earnings Per Common Share | The computation of basic and diluted earnings per common share is as follows: Three months ended March 26, March 28, Net income attributable to Dunkin’ Brands—basic and diluted (in thousands) $ 37,154 25,631 Weighted average number of common shares: Common—basic 91,684,844 100,271,701 Common—diluted 92,618,269 101,502,438 Earnings per common share: Common—basic $ 0.41 0.26 Common—diluted 0.40 0.25 |
Related-Party Transactions (Tab
Related-Party Transactions (Tables) | 3 Months Ended |
Mar. 26, 2016 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | The Company recognized royalty income from its equity method investees as follows (in thousands): Three months ended March 26, March 28, B-R 31 Ice Cream Co., Ltd. $ 321 242 BR-Korea Co., Ltd. 893 1,013 $ 1,214 1,255 |
Summary of Significant Accoun28
Summary of Significant Accounting Policies - Additional Information (Detail) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 26, 2016USD ($)customer | Mar. 28, 2015customer | Dec. 26, 2015USD ($) | |
Summary of Significant Accounting Policies, Narrative [Line Items] | |||
Financial reporting and operating period, quarter | 91 days | 91 days | |
Carrying Value and Estimated Fair Value Of Long Term Debt [Abstract] | |||
Term loans, Carrying Value | $ | $ 2,440,909 | $ 2,445,600 | |
Term loans, Estimated fair value | $ | $ 2,416,141 | $ 2,443,687 | |
Manufacture and/or Distributer [Member] | |||
Summary of Significant Accounting Policies, Narrative [Line Items] | |||
Concentration Risk, Customer | 0 | 1 | |
Concentration Risk, Percentage | 13.00% | ||
Minimum | |||
Summary of Significant Accounting Policies, Narrative [Line Items] | |||
Financial reporting and operating period, year | 364 days | ||
Customer Concentration Risk [Member] | |||
Summary of Significant Accounting Policies, Narrative [Line Items] | |||
Percentage of receivable from one master licensee account | 23.00% | 13.00% | |
Customer Concentration Risk [Member] | Accounts Receivable [Member] | |||
Summary of Significant Accounting Policies, Narrative [Line Items] | |||
Concentration Risk, Customer | 1 | ||
Concentration risk, number of customers | customer | 1 | ||
Customer Concentration Risk [Member] | Sales [Member] | |||
Summary of Significant Accounting Policies, Narrative [Line Items] | |||
Concentration risk, number of customers | customer | 0 | 0 |
Financial Assets and Liabilitie
Financial Assets and Liabilities Measured at Fair Value on Recurring Basis (Detail) - USD ($) $ in Thousands | Mar. 26, 2016 | Dec. 26, 2015 |
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items] | ||
Assets | $ 5,673 | $ 5,802 |
Liabilities | 9,676 | 9,068 |
Company-owned life insurance | ||
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items] | ||
Assets | 5,673 | 5,802 |
Deferred compensation liabilities | ||
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items] | ||
Liabilities | 9,676 | 9,068 |
Significant other observable inputs (Level 2) | ||
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items] | ||
Assets | 5,673 | 5,802 |
Liabilities | 9,676 | 9,068 |
Significant other observable inputs (Level 2) | Company-owned life insurance | ||
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items] | ||
Assets | 5,673 | 5,802 |
Significant other observable inputs (Level 2) | Deferred compensation liabilities | ||
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items] | ||
Liabilities | $ 9,676 | $ 9,068 |
Summary of Significant Accoun30
Summary of Significant Accounting Policies Recent Accounting Pronouncements (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended |
Mar. 26, 2016 | Dec. 26, 2015 | |
Disclosure Summary Of Significant Accounting Policies Additional Information [Abstract] | ||
New Accounting Pronouncement or Change in Accounting Principle, Effect of Adoption, Quantification | $ 0.5 | $ 11.5 |
Summary of Significant Accoun31
Summary of Significant Accounting Policies Reclassifications (Details) $ in Millions | 3 Months Ended |
Mar. 28, 2015USD ($) | |
Sales Revenue, Goods, Net [Member] | |
Error Corrections and Prior Period Adjustments Restatement [Line Items] | |
Prior Period Reclassification Adjustment | $ 0.5 |
Cost of Goods, Total [Member] | |
Error Corrections and Prior Period Adjustments Restatement [Line Items] | |
Prior Period Reclassification Adjustment | $ 0.5 |
Franchise Fees and Royalty In32
Franchise Fees and Royalty Income (Detail) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 26, 2016 | Mar. 28, 2015 | |
Disclosure Franchise Fees And Royalty Income [Abstract] | ||
Royalty income | $ 113,366 | $ 106,121 |
Initial franchise fees and renewal income | 10,417 | 9,204 |
Total franchise fees and royalty income | $ 123,783 | $ 115,325 |
Changes in Franchised and Compa
Changes in Franchised and Company-Owned Points of Distribution (Detail) - distributor | 3 Months Ended | |
Mar. 26, 2016 | Mar. 28, 2015 | |
Number of Franchises [Roll Forward] | ||
Franchised points of distribution in operation—beginning of period | 19,308 | 18,821 |
Franchised points of distribution—opened | 301 | 298 |
Franchised points of distribution—closed | (189) | (219) |
Net transfers from (to) company-operated points of distribution | 10 | (2) |
Franchised points of distribution in operation—end of period | 19,430 | 18,898 |
Company-operated points of distribution—end of period | 41 | 43 |
Total systemwide points of distribution—end of period | 19,471 | 18,941 |
Debt - Additional Information (
Debt - Additional Information (Detail) $ in Thousands | 3 Months Ended | |||
Mar. 26, 2016USD ($) | Mar. 28, 2015USD ($) | Dec. 26, 2015USD ($) | Jan. 26, 2015USD ($) | |
Debt Instrument [Line Items] | ||||
Leverage Ratio Maximum, No Excess Cash Flow Payment | 5 | |||
Long-term debt | $ 2,440,909 | $ 2,445,600 | ||
Other debt extinguishment and refinancing expense | 41,300 | |||
Standby letters of credit | 25,900 | 26,300 | ||
Amounts drawn on letters of credit | 0 | $ 0 | ||
Loss on debt extinguishment and refinancing transactions | $ 0 | $ 20,554 | ||
Variable Funding Notes [Member] | ||||
Debt Instrument [Line Items] | ||||
Line of Credit Facility, Commitment Fee Percentage | 2.25% | |||
Variable Funding Notes [Member] | LIBOR [Member] | ||||
Debt Instrument [Line Items] | ||||
Interest rate components | 2.25% | |||
A-2-I [Member] | ||||
Debt Instrument [Line Items] | ||||
Debt Instrument, Interest Rate, Stated Percentage | 3.262% | |||
Debt Instrument, Face Amount | $ 750,000 | |||
Repayment of credit facility per calendar year | $ 7,500 | |||
Long-term debt | $ 742,500 | |||
Effective interest rate | 3.50% | |||
A-2-II [Member] | ||||
Debt Instrument [Line Items] | ||||
Debt Instrument, Interest Rate, Stated Percentage | 3.98% | |||
Debt Instrument, Face Amount | $ 1,750,000 | |||
Repayment of credit facility per calendar year | $ 17,500 | |||
Long-term debt | $ 1,730,000 | |||
Effective interest rate | 4.30% | |||
Variable Funding Notes [Member] | ||||
Debt Instrument [Line Items] | ||||
Debt Instrument, Face Amount | $ 100,000 | |||
Variable Funding Notes [Member] | Minimum | ||||
Debt Instrument [Line Items] | ||||
Line of Credit Facility, Commitment Fee Percentage | 0.50% | |||
Variable Funding Notes [Member] | Maximum | ||||
Debt Instrument [Line Items] | ||||
Line of Credit Facility, Commitment Fee Percentage | 1.00% |
Derivative instruments and He35
Derivative instruments and Hedging Transactions (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||
Mar. 26, 2016 | Mar. 28, 2015 | Mar. 25, 2017 | Dec. 26, 2015 | Dec. 23, 2014 | |
Derivative [Line Items] | |||||
Other Comprehensive Income (Loss), Derivatives Qualifying as Hedges, before Tax | $ (535) | $ (535) | |||
Derivative, Gain on Derivative | 3,600 | $ 4,100 | |||
Other Comprehensive Income (Loss), Reclassification Adjustment from AOCI on Derivatives, Tax | (217) | (217) | |||
Other Comprehensive Income (Loss), Derivatives Qualifying as Hedges, Tax | (217) | (217) | |||
Other Comprehensive Income (Loss), Reclassification Adjustment from AOCI on Derivatives, Net of Tax | 318 | 318 | |||
Effect of interest rate swaps, net of deferred tax benefit of $217 for each of the three months ended March 26, 2016 and March 28, 2015 | $ (318) | $ (318) | |||
Swap [Member] | |||||
Derivative [Line Items] | |||||
Derivative, Fair Value, Net | $ 6,300 | ||||
Accrued Liabilities | $ 1,000 | ||||
Scenario, Forecast [Member] | |||||
Derivative [Line Items] | |||||
Estimated reclassification from Accumulated OCI to Income for the next twelve months | $ 2,200 |
Derivative Instruments and He36
Derivative Instruments and Hedging Transaction - Derivative Effects (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 26, 2016 | Mar. 28, 2015 | |
Derivative [Line Items] | ||
Interest rate swaps, Total effect on other comprehensive income (loss) | $ (535) | $ (535) |
Income tax effect, Amount of net gain (loss) reclassified into earnings | 217 | 217 |
Income tax effect, Total effect on other comprehensive income (loss) | 217 | 217 |
Other Comprehensive Income (Loss), Reclassification Adjustment from AOCI on Derivatives, Net of Tax | 318 | 318 |
Effect of interest rate swaps, net of deferred tax benefit of $217 for each of the three months ended March 26, 2016 and March 28, 2015 | (318) | (318) |
Interest Expense [Member] | ||
Derivative [Line Items] | ||
Other Comprehensive Income (Loss), Reclassification Adjustment from AOCI on Derivatives, before Tax | 535 | 535 |
Provision for Income Taxes [Member] | ||
Derivative [Line Items] | ||
Income tax effect, Amount of net gain (loss) reclassified into earnings | $ (217) | $ (217) |
Other Current Liabilities (Deta
Other Current Liabilities (Detail) - USD ($) $ in Thousands | Mar. 26, 2016 | Dec. 26, 2015 |
Other Liabilities, Current [Abstract] | ||
Gift card/certificate liability | $ 123,067 | $ 176,080 |
Gift card breakage liability | 23,816 | 23,955 |
Accrued payroll and benefits | 14,546 | 29,540 |
Accrued legal liabilities (see note 10(c)) | 19,188 | 18,267 |
Accrued interest | 9,444 | 9,522 |
Accrued professional costs | 2,788 | 4,814 |
Franchisee profit-sharing liability | 3,391 | 8,406 |
Other | 23,318 | 22,275 |
Total other current liabilities | $ 219,558 | $ 292,859 |
Segment Information - Additiona
Segment Information - Additional Information (Detail) | 3 Months Ended |
Mar. 26, 2016segment | |
Segment Reporting [Abstract] | |
Number of reportable segments | 4 |
Revenues by Segment (Detail)
Revenues by Segment (Detail) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 26, 2016 | Mar. 28, 2015 | |
Segment Reporting, Revenue Reconciling Item [Line Items] | ||
Total revenues | $ 189,776 | $ 185,905 |
Other | ||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||
Total revenues | 6,318 | 12,021 |
Operating Segments | ||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||
Total revenues | 183,458 | 173,884 |
Operating Segments | Dunkin' Donuts | United States | ||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||
Total revenues | 138,813 | 133,867 |
Operating Segments | Dunkin' Donuts | International | ||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||
Total revenues | 7,250 | 6,578 |
Operating Segments | Baskin-Robbins | United States | ||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||
Total revenues | 10,561 | 10,309 |
Operating Segments | Baskin-Robbins | International | ||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||
Total revenues | $ 26,834 | $ 23,130 |
Segment Profit by Segment (Deta
Segment Profit by Segment (Detail) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 26, 2016 | Mar. 28, 2015 | |
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | ||
Reportable segment profit | $ 37,154 | $ 25,425 |
Corporate | (28,699) | (20,329) |
Interest expense, net | (24,732) | (22,042) |
Amortization of other intangible assets | (5,761) | (6,200) |
Long-lived asset impairment charges | (93) | (264) |
Loss on debt extinguishment and refinancing transactions | 0 | (20,554) |
Other losses, net | (370) | (545) |
Income before income taxes | 60,231 | 40,599 |
Operating Segments | ||
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | ||
Reportable segment profit | 119,886 | 110,533 |
Operating Segments | Dunkin' Donuts | United States | ||
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | ||
Reportable segment profit | 100,444 | 93,714 |
Operating Segments | Dunkin' Donuts | International | ||
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | ||
Reportable segment profit | 3,758 | 3,674 |
Operating Segments | Baskin-Robbins | United States | ||
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | ||
Reportable segment profit | 7,300 | 6,088 |
Operating Segments | Baskin-Robbins | International | ||
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | ||
Reportable segment profit | $ 8,384 | $ 7,057 |
Equity in Net Income of Joint V
Equity in Net Income of Joint Ventures Reportable Segment (Detail) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 26, 2016 | Mar. 28, 2015 | |
Segment Reporting Disclosure [Line Items] | ||
Net income of equity method investments, excluding impairment | $ 2,964 | $ 2,947 |
Other | ||
Segment Reporting Disclosure [Line Items] | ||
Net income of equity method investments, excluding impairment | 715 | 93 |
Operating Segments | ||
Segment Reporting Disclosure [Line Items] | ||
Net income of equity method investments, excluding impairment | 2,249 | 2,854 |
Operating Segments | Dunkin' Donuts | International | ||
Segment Reporting Disclosure [Line Items] | ||
Net income of equity method investments, excluding impairment | 174 | 289 |
Operating Segments | Baskin-Robbins | International | ||
Segment Reporting Disclosure [Line Items] | ||
Net income of equity method investments, excluding impairment | $ 2,075 | $ 2,565 |
Stockholders_ Equity (Deficit42
Stockholders’ Equity (Deficit) and Redeemable Noncontrolling Interests - Additional Information (Detail) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||
Jun. 25, 2016 | Mar. 26, 2016 | Dec. 26, 2015 | Mar. 28, 2015 | Dec. 26, 2015 | |
Class of Stock [Line Items] | |||||
Increase in treasury stock | $ 30,000 | ||||
Dividend per share of common stock paid (in usd per share) | $ 0.30 | ||||
Dividends paid on common stock | $ 27,395 | $ 25,688 | |||
Dividend per share of common stock declared (in usd per share) | $ 0.30 | $ 0.27 | |||
Subsequent Event [Member] | |||||
Class of Stock [Line Items] | |||||
Dividend per share of common stock declared (in usd per share) | $ 0.300 | ||||
Accelerated Share Repurchase Agreement [Member] | |||||
Class of Stock [Line Items] | |||||
Stock Repurchase Program, Authorized Amount | $ 30,000 | $ 125,000 | $ 125,000 | ||
Treasury stock acquired (in shares) | 702,239 | 2,527,167 | 483,913 | ||
Treasury stock acquired, weighted average price (in usd per share) | $ 42.72 | $ 41.51 | |||
2011 Plan | |||||
Class of Stock [Line Items] | |||||
Options granted | 1,384,294 | ||||
Restricted stock units granted (in shares) | 39,684 | ||||
Options, grant date fair value (in usd per share) | $ 7.40 | ||||
Grant price (in usd per share) | 44.35 | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period, Weighted Average Grant Date Fair Value | $ 55.36 | ||||
Compensation expense related to share-based awards | $ 4,100 | $ 3,700 | |||
2011 Plan | Employee Stock Option | |||||
Class of Stock [Line Items] | |||||
Share-based compensations, vesting period | 4 years | ||||
Options, maximum contractual term | 7 years | ||||
2011 Plan | Restricted Stock Units (RSUs) [Member] | |||||
Class of Stock [Line Items] | |||||
Restricted stock units granted (in shares) | 73,794 | ||||
Share-based compensations, vesting period | 3 years | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period, Weighted Average Grant Date Fair Value | $ 41.76 | ||||
2011 Plan | Phantom Share Units (PSUs) [Member] | |||||
Class of Stock [Line Items] | |||||
Restricted stock units granted (in shares) | 92,487 | ||||
2011 Plan | Performance Shares [Member] | |||||
Class of Stock [Line Items] | |||||
Restricted stock units granted (in shares) | 52,803 | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period, Weighted Average Grant Date Fair Value | $ 41.61 | ||||
Treasury Stock [Member] | |||||
Class of Stock [Line Items] | |||||
Increase in treasury stock | $ 55,000 | ||||
Treasury stock, shares retired | 1,186,152 | ||||
Stockholders' Equity, Period Increase (Decrease) | $ (55,000) | ||||
Additional Paid-in Capital [Member] | |||||
Class of Stock [Line Items] | |||||
Stockholders' Equity, Period Increase (Decrease) | (11,300) | ||||
Accumulated Deficit [Member] | |||||
Class of Stock [Line Items] | |||||
Stockholders' Equity, Period Increase (Decrease) | $ 43,700 |
Changes in Total Shareholders'
Changes in Total Shareholders' Equity (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 26, 2016 | Mar. 28, 2015 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||
Balance as of December 26, 2015 | $ (220,743) | |
Net income attributable to Dunkin' Brands | 37,154 | |
Other comprehensive income | 1,914 | $ 554 |
Dividends paid on common stock | (27,395) | |
Exercise of stock options | 1,086 | |
Repurchases of common stock | (30,000) | |
Share-based compensation expense | 4,140 | |
Excess tax benefits from share-based compensation | 538 | $ 1,424 |
Deconsolidation of noncontrolling interest | (208) | |
Other, net | (1,078) | |
Balance as of March 26, 2016 | $ (234,592) |
Changes in Components of Accumu
Changes in Components of Accumulated Other Comprehensive Income (Detail) $ in Thousands | 3 Months Ended |
Mar. 26, 2016USD ($) | |
Movement in Accumulated Other Comprehensive Income (Loss) [Roll Forward] | |
Balance as of December 26, 2015 | $ (20,046) |
Other comprehensive income (loss), net | 1,914 |
Balance as of March 26, 2016 | (18,132) |
Effect of foreign currency translation | |
Movement in Accumulated Other Comprehensive Income (Loss) [Roll Forward] | |
Balance as of December 26, 2015 | (20,459) |
Other comprehensive income (loss), net | 2,257 |
Balance as of March 26, 2016 | (18,202) |
Unrealized gains on interest rate swaps | |
Movement in Accumulated Other Comprehensive Income (Loss) [Roll Forward] | |
Balance as of December 26, 2015 | 2,443 |
Other comprehensive income (loss), net | (318) |
Balance as of March 26, 2016 | 2,125 |
Other | |
Movement in Accumulated Other Comprehensive Income (Loss) [Roll Forward] | |
Balance as of December 26, 2015 | (2,030) |
Other comprehensive income (loss), net | (25) |
Balance as of March 26, 2016 | $ (2,055) |
Earnings Per Shares - Additiona
Earnings Per Shares - Additional Information (Detail) - shares | 3 Months Ended | |
Mar. 26, 2016 | Mar. 28, 2015 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Dilutive securities, effect on basic earnings per share, including options and restrictive units | 933,425 | 1,230,737 |
Restricted Stock [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Anti-dilutive security excluded from calculation, restricted stock awards (in shares) | 150,000 | 150,000 |
Stock Options [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of earnings per share, amount | 4,512,079 | 3,084,195 |
Computation of Basic and Dilute
Computation of Basic and Diluted Earnings Per Common Share (Detail) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 26, 2016 | Mar. 28, 2015 | |
Earnings Per Share [Abstract] | ||
Net income attributable to Dunkin' Brands-basic and diluted | $ 37,154 | $ 25,631 |
Weighted average number of common shares: | ||
Common-basic (in shares) | 91,684,844 | 100,271,701 |
Common-diluted (in shares) | 92,618,269 | 101,502,438 |
Earnings (loss) per common share: | ||
Common-basic (in dollars per share) | $ 0.41 | $ 0.26 |
Common-diluted (in dollars per share) | $ 0.40 | $ 0.25 |
Commitments and Contingencies -
Commitments and Contingencies - Additional Information (Detail) $ in Thousands, CAD in Millions | 1 Months Ended | 3 Months Ended | |||
Apr. 30, 2015CAD | Jun. 22, 2012CAD | Mar. 26, 2016USD ($) | Mar. 28, 2015USD ($) | Dec. 26, 2015USD ($) | |
Commitments and Contingencies Disclosure [Line Items] | |||||
Standby letters of credit | $ 25,900 | $ 26,300 | |||
Amounts drawn on letters of credit | 0 | 0 | |||
Performance Guarantee [Member] | |||||
Commitments and Contingencies Disclosure [Line Items] | |||||
Loss Contingency Accrual | 0 | ||||
Other Legal Matter [Member] | |||||
Commitments and Contingencies Disclosure [Line Items] | |||||
Contingent liabilities related to legal matters | 215 | ||||
General and Administrative Expense [Member] | |||||
Commitments and Contingencies Disclosure [Line Items] | |||||
Decrease in Legal Reserve | $ 2,800 | ||||
Financial Guarantee [Member] | |||||
Commitments and Contingencies Disclosure [Line Items] | |||||
Guarantee obligation, maximum exposure | 1,900 | 2,000 | |||
Guarantor Obligations, Current Carrying Value | 0 | 0 | |||
Lease Agreements | |||||
Commitments and Contingencies Disclosure [Line Items] | |||||
Guarantee obligation, maximum exposure | 3,600 | 3,700 | |||
Bertico litigation | |||||
Commitments and Contingencies Disclosure [Line Items] | |||||
Litigation judgment | CAD | CAD 10.9 | CAD 16.4 | |||
Contingent liabilities related to legal matters | 19,000 | ||||
Supply Commitment | |||||
Commitments and Contingencies Disclosure [Line Items] | |||||
Guarantee obligation, maximum exposure | $ 152,500 | $ 157,800 | |||
Minimum | |||||
Commitments and Contingencies Disclosure [Line Items] | |||||
Franchisees financing term | 3 years | 3 years | |||
Maximum | |||||
Commitments and Contingencies Disclosure [Line Items] | |||||
Franchisees financing term | 10 years | 10 years |
Related-Party Transactions - Ad
Related-Party Transactions - Additional Information (Detail) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 26, 2016 | Mar. 28, 2015 | Dec. 26, 2015 | |
Related Party Transaction [Line Items] | |||
Net payable of advertising funds | $ 5,200 | $ 11,600 | |
Fee for managing advertising funds | 2,400 | $ 2,400 | |
Advertising funds contribution, company-owned restaurant | 281 | 265 | |
Advertising funds contribution, prepaid future initiatives | 505 | 512 | |
Royalties receivable from joint ventures | 900 | 1,100 | |
Related Party Transaction, Advertising Funds Discretionary Contributions | 0 | ||
B-R 31 Ice Cream Co., Ltd. ("BR Japan") | |||
Related Party Transaction [Line Items] | |||
Royalty received from joint venture | 321 | 242 | |
BR Korea Co., Ltd. ("BR Korea") | |||
Related Party Transaction [Line Items] | |||
Royalty received from joint venture | 893 | 1,013 | |
Related Party | |||
Related Party Transaction [Line Items] | |||
Royalty received from joint venture | 1,214 | 1,255 | |
Joint Ventures | |||
Related Party Transaction [Line Items] | |||
Payments to joint ventures | 820 | 998 | |
Spain JV [Member] | |||
Related Party Transaction [Line Items] | |||
Loans receivable | 2,100 | $ 2,100 | |
Australia Joint Venture | |||
Related Party Transaction [Line Items] | |||
Revenue from related parties | $ 463 | $ 400 | |
Ownership percentage | 20.00% | 20.00% | |
Due from joint ventures | $ 2,500 | $ 3,100 |