Dunkin' Donuts 2015 Annual Report Download

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2015
ANNUAL
REPORT

Table of contents

  • Page 1
    2015 ANNUAL R E P ORT

  • Page 2
    ... nearly 10 percent adjusted operating income growth and 11 percent adjusted earnings per share growth, and, importantly, both our U.S. businesses showed growth in franchisee store-level profits. We had several other significant accomplishments in 2015, including: • Growing the Dunkin' Donuts...

  • Page 3
    ...' Original Blend was the #1 item in the grocery K-Cup category in December 2015, and through early 2016, the Dunkin' brand accounted for six of the top 45 K-Cup SKUs sold in grocery stores. By increasing the number of channels selling Dunkin' K-Cups, we dramatically increased our TOTAL coffee sales...

  • Page 4
    ... the Dunkin' Donuts U.S. comparable store sales performance particularly in the second half of 2015. In response to this, we spent countless hours doing deep dives into our customer analytics, and based on those findings, developed a 5-part strategic plan, which we believe will return our brand to...

  • Page 5
    ... around; we're confident in our strategic growth plan; and we're confident in the power of the Dunkin' Donuts brand. 430 net new Dunkin' Donuts units* 3rd consecutive year of 5% plus store growth rate Long-term goal of 17,000+ Dunkin' Donuts in U.S. *Excluding the closing of 81 Speedway self-serve...

  • Page 6
    ... in South Africa. Dunkin' Brands Chairman & CEO Nigel Travis attends a ribbon cutting ceremony for the grand opening of Dunkin' Donuts in the Pinnacle Plaza in Beijing, China. Added 127 net new International Baskin-Robbins and Dunkin' Donuts locations outside the U.S. in 2015 Last year was one of...

  • Page 7
    ... held by non-affiliates of Dunkin' Brands Group, Inc. computed by reference to the closing price of the registrant's common stock on the NASDAQ Global Select Market as of June 27, 2015, was approximately $5.27 billion. As of February 16, 2016, 91,667,379 shares of common stock of the registrant were...

  • Page 8

  • Page 9
    ... of Financial Condition and Results of Operations Quantitative and Qualitative Disclosures about Market Risk Financial Statements and Supplementary Data Changes in and Disagreements with Accountants on Accounting and Financial Disclosure Controls and Procedures Other Information Part III. Directors...

  • Page 10
    ... performance and that our actual results of operations, financial condition and liquidity, and the development of the industry in which we operate may differ materially from those made in or suggested by the forward-looking statements contained in this report. In addition, even if our results of...

  • Page 11
    ... ice cream and other products to franchisees in certain international markets; (iv) retail store revenue at our company-operated restaurants, and (v) other income including fees for the licensing of the Dunkin' Donuts brand for products sold in non-franchised outlets (such as retail packaged coffee...

  • Page 12
    ... different flavor for each day of the month, is recognized by ice cream consumers nationwide. For fiscal year 2015, the Baskin-Robbins franchise system generated U.S. franchisee-reported sales of approximately $582 million, which accounted for approximately 6% of our global franchisee-reported sales...

  • Page 13
    ... per year. To complement these procedures, we use "Guest Satisfaction Surveys" in the U.S. to assess customer satisfaction with restaurant operations, such as product quality, restaurant cleanliness, and customer service. Store development agreements We grant domestic franchisees the right to open...

  • Page 14
    ... agreement, Dunkin' Brands receives a fee based on net sales of covered products. For fiscal year 2015, we generated 1.2%, or $10.1 million, of our total revenue from license fees from Dean Foods. We distribute ice cream products to Baskin-Robbins franchisees who operate Baskin-Robbins restaurants...

  • Page 15
    ... and supplies restaurants located in South Korea with ice cream, donuts, and coffee products. Japan Restaurants in Japan accounted for approximately 18% of total franchisee-reported sales from international operations for fiscal year 2015, 100% of which came from Baskin-Robbins. We conduct business...

  • Page 16
    ...") and Smuckers for sale of Dunkin' K-Cup® pods in non-franchised outlets (primarily grocery retail), as well as from other licensees. For the 52 weeks ending December 27, 2015, the Dunkin' Donuts branded 12 oz. original blend coffee, which is distributed by Smuckers, was the #1 stock-keeping unit...

  • Page 17
    ... limited contractual rights associated with managing that franchisee-owned purchasing and distribution cooperative. Manufacturing of Dunkin' Donuts bakery goods Centralized production is another element of our supply chain that is designed to support growth for the Dunkin' Donuts brand. Centralized...

  • Page 18
    ...sensory lab, a quality assurance lab and a demonstration test kitchen. We rely on our internal culinary team, which uses consumer research, to develop and test new products. Operational support Substantially all of our executive management, finance, marketing, legal, technology, human resources, and...

  • Page 19
    ... to our business. Seasonality Our revenues are subject to fluctuations based on seasonality, primarily with respect to Baskin-Robbins. The ice cream industry generally experiences an increase during the spring and summer months, whereas Dunkin' Donuts hot beverage sales generally increase during the...

  • Page 20
    ... standards, franchise fees paid to us and royalty income will be adversely affected and brand image and reputation could be harmed, which in turn could materially and adversely affect our business and operating results. Although we believe we generally enjoy a positive working relationship with...

  • Page 21
    ...competitive position, we could experience lower demand for products, downward pressure on prices, the loss of market share, and the inability to attract, or loss of, qualified franchisees, which could result in lower franchise fees and royalty income, and materially and adversely affect our business...

  • Page 22
    ... our product mix, service offerings, and marketing and merchandising initiatives for products and services that address, and anticipate advances in, technology and market trends. If we are not able to successfully respond to these challenges, our business, financial condition, and operating results...

  • Page 23
    ... to the expiration of the applicable term, our cash flow would be directed to the repayment of the securitized debt and, other than management fees sufficient to cover minimal selling, general and administrative expenses, would not be available for operating our business. No assurance can be given...

  • Page 24
    ... business. We regard our Dunkin' Donuts® and Baskin-Robbins® trademarks as having significant value and as being important factors in the marketing of our brands. We have also obtained trademark protection for the trademarks associated with several of our product offerings and advertising slogans...

  • Page 25
    ... implement our growth strategy, which includes opening new domestic and international restaurants, our ability to increase our revenues and operating profits could be adversely affected. Our growth strategy relies in part upon new restaurant development by existing and new franchisees. We...

  • Page 26
    ... ice cream products independently. The joint ventures in Japan and South Korea each own a manufacturing facility in its country of operation. The revenues derived from these joint ventures differ fundamentally from those of other types of franchise arrangements in the system because the income...

  • Page 27
    ...burdens and costs of local operators' compliance with a variety of laws, including trade restrictions and tariffs; interruption of the supply of product; increases in anti-American sentiment and the identification of the Dunkin' Donuts brand and Baskin-Robbins brand as American brands; political and...

  • Page 28
    ... or an interruption in the operation of one of our brands in a particular market or markets. Any such delay or interruption would result in a delay in, or loss of, royalty income to us whether by way of delayed royalty income or delayed revenues from the sale of ice cream and other products by us to...

  • Page 29
    ... (including polystyrene used in the iconic Dunkin' Donuts cup), or requiring the display of detailed nutrition information. Each of these regulations would be costly to comply with and/or could result in reduced demand for our products. In connection with the continued operation or remodeling of...

  • Page 30
    ... on the franchisee's execution of the then-current form of franchise arrangements (which may include increased royalty payments, advertising fees, and other costs), the satisfaction of certain conditions (including modernization of the restaurant and related operations), and the payment of a renewal...

  • Page 31
    ...to resell your shares at or above the price you paid for them. Since our initial public offering in July 2011, the price of our common stock, as reported by NASDAQ, has ranged from a low of $23.24 on December 15, 2011 to a high of $56.79 on July 14, 2015. In addition, the stock market in general has...

  • Page 32
    ...headquarters, located in Canton, Massachusetts, houses substantially all of our executive management and employees who provide our primary corporate support functions: legal, marketing, technology, human resources, public relations, financial and research and development. As of December 26, 2015, we...

  • Page 33
    ... as of December 26, 2015. Franchised points of distribution Company-operated points of distribution Dunkin' Donuts-US* Dunkin' Donuts-International Total Dunkin' Donuts* Baskin-Robbins-US* Baskin-Robbins-International Total Baskin-Robbins* Total US Total International * 8,392 3,319 11,711...

  • Page 34
    ...its franchise agreements and provided inadequate management and support to Dunkin' Donuts franchisees in Quebec ("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...

  • Page 35
    ... to $700.0 million of outstanding shares of our common stock. Under the program, purchases may be made in the open market or in privately negotiated transactions from time to time subject to market conditions. On February 4, 2016, our board of directors increased the availability under the existing...

  • Page 36
    ... of its common stock based on a weighted average cost per share of $41.51 over the term of the October 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...

  • Page 37
    ... reinvestment of dividends paid since that date. The stock price performance shown in the graph is not necessarily indicative of future price performance. 7/27/2011 12/31/2011 12/29/2012 12/28/2013 12/27/2014 12/26/2015 Dunkin' Brands Group, Inc. (DNKN) S&P 500 S&P Consumer Discretionary $ 100...

  • Page 38
    .... Fiscal Year 2015 2014 2013 2012 2011 ($ in thousands, except per share data) Consolidated Statements of Operations Data: Franchise fees and royalty income Rental income Sales of ice cream and other products(1) Sales at company-operated restaurants Other revenues(1) Total revenues Amortization of...

  • Page 39
    ... cash Total assets(5) Total debt(5)(6) Total liabilities(5) Total stockholders' equity (deficit) Other Financial Data: Capital expenditures Adjusted operating income Adjusted net income(7) Points of Distribution(8): Dunkin' Donuts U.S. Dunkin' Donuts International Baskin-Robbins U.S. Baskin-Robbins...

  • Page 40
    ... of our financial results in accordance with GAAP. Use of the terms adjusted operating income and adjusted net income may differ from similar measures reported by other companies. Adjusted operating income and adjusted net income are reconciled from operating income and net income, respectively...

  • Page 41
    Fiscal Year 2015 2014 2013 (Unaudited, $ in thousands) 2012 2011 Operating income Adjustments: Amortization of other intangible assets Long-lived asset impairment charges Third-party product volume guarantee Sponsor termination fee Secondary offering costs Peterborough plant closure(a) $ 319,567 ...

  • Page 42
    ... to Dunkin' Brands Canada ULC. Represents tax expense recognized due to an increase in our overall state tax rate for a shift in the apportionment of income to certain state jurisdictions. (8) (9) (10) (11) (12) (13) Represents period end points of distribution. Represents the growth in average...

  • Page 43
    ...operating and financial highlights Fiscal year 2015 2014 2013 Systemwide sales growth Comparable store sales growth (decline): Dunkin' Donuts U.S.(1) Dunkin' Donuts International Baskin-Robbins U.S.(1) Baskin-Robbins International Total revenues Operating income Adjusted operating income Net income...

  • Page 44
    ...systemwide sales for fiscal year 2015 increased by approximately 5%. Dunkin' Donuts International comparable store sales increased 0.5% driven primarily by increases in Asia, South America, and the Middle East, offset by declines in Europe and South Korea. Baskin-Robbins U.S. systemwide sales growth...

  • Page 45
    ... U.S. Baskin-Robbins International Consolidated global net openings 349 91 19 36 495 405 47 17 235 704 (1) Net openings for Dunkin' Donuts U.S. for fiscal year 2015 reflect the previously-announced closing of 81 self-serve coffee stations within Speedway locations. The increase in total revenues...

  • Page 46
    ...U.S. Dunkin' Donuts International Baskin-Robbins U.S. Baskin-Robbins International Consolidated global net openings 405 47 17 235 704 371 138 4 277 790 The increase in total revenues of $34.9 million, or 4.9%, for fiscal year 2014 resulted primarily from a $28.4 million increase in franchise fees...

  • Page 47
    ...165,761 108,217,011 1.53 Fiscal year 2015 2014 Increase (Decrease) $ % (In thousands, except percentages) Franchise fees and royalty income Rental income Sales of ice cream and other products(1) Sales at company-operated restaurants Other revenues(1) Total revenues $ $ 513,222 100,422 115,252...

  • Page 48
    .... Total revenues increased $62.2 million, or 8.3%, in fiscal year 2015, driven by an increase in franchise fees and royalty income of $30.9 million, or 6.4%, primarily as a result of Dunkin' Donuts U.S. systemwide sales growth and additional franchise fees due to favorable development mix...

  • Page 49
    ...sale of real estate and fluctuates based on the timing of such transactions. Additionally, other operating income, net of $7.8 million for fiscal year 2014 included a gain recognized in connection with the sale of the company-operated restaurants in the Atlanta market. Fiscal year 2015 2014 Increase...

  • Page 50
    ... certain international markets, all of which are not allocated to a specific segment. Dunkin' Donuts U.S. Fiscal year 2015 2014 Increase (Decrease) $ % (In thousands, except percentages) Royalty income Franchise fees Rental income Sales at company-operated restaurants Other revenues Total revenues...

  • Page 51
    ... activities and increased personnel costs. Baskin-Robbins International Fiscal year 2015 2014 Increase (Decrease) $ % (In thousands, except percentages) Royalty income Franchise fees Rental income Sales of ice cream and other products Other revenues Total revenues Segment profit $ $ $ 6,261 872...

  • Page 52
    ...year 2014, driven by an increase in franchise fees and royalty income of $28.4 million, or 6.2%, primarily as a result of Dunkin' Donuts U.S. systemwide sales growth and additional franchise fees due to favorable development mix and additional gross development. Sales of ice cream and other products...

  • Page 53
    ... million charge recorded in the prior year related to a third-party product volume guarantee, offset by additional breakage income, net of gift card program costs, recorded in fiscal year 2013 of $5.4 million on unredeemed Dunkin' Donuts gift card balances. The balance of the fluctuation in general...

  • Page 54
    ...the sale of the company-operated restaurants in Atlanta and other real estate, as well as an increase in other revenues. The increases in segment profit were partially offset by increases in personnel costs and additional bad debt reserves. Dunkin' Donuts International Fiscal year 2014 2013 Increase...

  • Page 55
    ... year 2013 related to unredeemed gift certificate balances. Baskin-Robbins International Fiscal year 2014 2013 Increase (Decrease) $ % (In thousands, except percentages) Royalty income Franchise fees Rental income Sales of ice cream and other products Other revenues Total revenues Segment profit...

  • Page 56
    ...cash flow were reduced proceeds from the sale of real estate and company-operated restaurants as compared to the prior fiscal year, the timing of receipts and payments related to the sale of Dunkin' K-Cup® pods and the related franchisee profit-sharing program, and increases in cash paid for income...

  • Page 57
    ... of its common stock based on a weighted average cost per share of $41.51 over the term of the October ASR agreement. Additionally, during the fiscal year 2015 we used $100.0 million to repurchase shares in the open market. In February 2016, our board of directors increased the availability under...

  • Page 58
    ... shares of its common stock or may elect to make a cash payment to the financial institution. Final settlement of the February 2016 ASR Agreement is expected to be completed in the first quarter of fiscal year 2016. In order to assess our current debt levels, including servicing our long-term debt...

  • Page 59
    .... Off balance sheet obligations In limited instances, we issue guarantees to financial institutions so that our franchisees can obtain financing with terms of approximately three to ten years for various business purposes. We recognize a liability and offsetting asset for the fair value of such...

  • Page 60
    .... Revenue from the sale of ice cream is recognized when title and risk of loss transfers to the buyer, which is generally upon delivery. Licensing fees are recognized when earned, which is generally upon sale of the underlying products by the licensees. Retail store revenues at company-operated...

  • Page 61
    ..., 2015. The fair value of the investment was determined with the assistance of a third-party valuation specialist using a combination of market and income approaches to valuation. Although public shareholders do hold a minority stake in the Japan JV, it was determined that the public stock price was...

  • Page 62
    ... fiscal years 2015, 2014, or 2013. We have intangible assets other than goodwill and trade names that are amortized on a straight-line basis over their estimated useful lives or terms of their related agreements. Other intangible assets consist primarily of franchise and international license rights...

  • Page 63
    ... balance sheet, resulting in a corresponding reduction in total assets and total long-term liabilities as of December 27, 2014. The adoption of this guidance did not have any impact in our consolidated statements of operations or cash flows. In May 2014, the FASB issued new guidance for revenue...

  • Page 64
    ... Financial Statements and Supplementary Data Report of Independent Registered Public Accounting Firm The Board of Directors and Stockholders Dunkin' Brands Group, Inc.: We have audited the accompanying consolidated balance sheets of Dunkin' Brands Group, Inc. and subsidiaries as of December 26, 2015...

  • Page 65
    DUNKIN' BRANDS GROUP, INC. AND SUBSIDIARIES Consolidated Balance Sheets (In thousands, except share data) December 26, 2015 December 27, 2014 Assets Current assets: Cash and cash equivalents Restricted cash Accounts receivable, net Notes and other receivables, net Restricted assets of advertising ...

  • Page 66
    ... Statements of Operations (In thousands, except per share data) Fiscal year ended December 26, 2015 December 27, 2014 December 28, 2013 Revenues: Franchise fees and royalty income Rental income Sales of ice cream and other products Sales at company-operated restaurants Other revenues Total revenues...

  • Page 67
    DUNKIN' BRANDS GROUP, INC. AND SUBSIDIARIES Consolidated Statements of Comprehensive Income (In thousands) Fiscal year ended December 26, 2015 December 27, 2014 December 28, 2013 Net income including noncontrolling interests $ Other comprehensive income (loss), net: Effect of foreign currency ...

  • Page 68
    DUNKIN' BRANDS GROUP, INC. AND SUBSIDIARIES Consolidated Statements of Stockholders' Equity (Deficit) (In thousands) Common stock Balance at December 29, 2012 Shares 106,142 - - 1,140 3,085) Amount $ 106 - - 1 Additional paid-in capital 1,251,498 - - 7,962 (3,085) Stockholders' equity (...

  • Page 69
    ...to property and equipment Proceeds from sale of real estate and company-operated restaurants Proceeds from sale of joint venture, net Other, net Net cash used in investing activities Cash flows from financing activities: Proceeds from issuance of long-term debt Repayment of long-term debt Payment of...

  • Page 70
    ..., 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...

  • Page 71
    ... (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. (e) Fair value of...

  • Page 72
    ... balance sheets. (g) Assets held for sale Assets held for sale primarily represent costs incurred by the Company for store equipment and leasehold improvements constructed for sale to franchisees, as well as restaurants formerly operated by franchisees or the Company waiting to be resold. The value...

  • Page 73
    ... as a liability and recorded as an operating expense at the time we cease use of the property. The value of any equipment and leasehold improvements related to a closed store is assessed for potential impairment (see note 2(j)). (j) Impairment of long-lived assets Long-lived assets that are used in...

  • Page 74
    ... consolidated balance sheets and are amortized into rental expense and rental income, respectively, over the base lease term of the respective leases using the straight-line method. The weighted average amortization period for all unfavorable operating leases acquired is 18 years. Management makes...

  • Page 75
    ... income in current liabilities in the consolidated balance sheets. Sales of ice cream and other products We distribute Baskin-Robbins ice cream products and, in limited cases, Dunkin' Donuts products to franchisees and licensees in certain international locations. Revenue from the sale of ice cream...

  • Page 76
    ... and losses, and is reported in the consolidated statements of comprehensive income, net of taxes, for all periods presented. (t) Debt issuance costs Debt issuance costs primarily represent capitalizable costs incurred related to the issuance and refinancing of the Company's long-term debt (see note...

  • Page 77
    ... Dunkin' Donuts gift card program costs incurred prior to fiscal year 2013. (w) 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...

  • Page 78
    ...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 $1.2 million have been reclassified from other revenues to sales of ice...

  • Page 79
    ..., 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...

  • Page 80
    ... costs, which is included in other operating income in the consolidated statements of operations for the fiscal year 2013. The gain consisted of net proceeds of $6.5 million, offset by the carrying value of the business included in the sale, which totaled $216 thousand. The Company retained...

  • Page 81
    ...of impairments of long-lived assets, net of tax, recorded in fiscal years 2015 and 2011, respectively. The carrying values of our investments in the Spain JV and the Australia JV were not material for any period presented. During the third quarter of fiscal year 2013, the Company fully reserved all...

  • Page 82
    ... sale Effects of foreign currency adjustments Balances at December 26, 2015 Accumulated impairment charges Net Balance Dunkin' Donuts International Goodwill Accumulated impairment charges Net Balance Baskin-Robbins International Goodwill Accumulated impairment charges Net Balance Goodwill Total...

  • Page 83
    ... within long-lived asset impairment charges in the consolidated statements of operations. Total estimated amortization expense for other intangible assets for fiscal years 2016 through 2020 is as follows (in thousands): Fiscal year: 2016 2017 2018 2019 2020 (8) Debt Debt at December 26, 2015 and...

  • Page 84
    .... Total amortization of original issue discount and debt issuance costs related to the senior credit facility was $4.0 million and $4.7 million for fiscal years 2014 and 2013, respectively, which is included in interest expense in the consolidated statements of operations. The Company recorded...

  • Page 85
    ... income (loss) 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 (loss) Interest rate swaps Income tax effect Net of income taxes...

  • Page 86
    ... income (loss) 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 (loss) Interest rate swaps Income tax effect Net of income taxes...

  • Page 87
    ... Company's consolidated balance sheets are the following amounts related to assets leased to others under operating leases, where the Company is the lessor (in thousands): December 26, 2015 December 27, 2014 Land Buildings Leasehold improvements Store, production, and other equipment Construction...

  • Page 88
    ... 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 sales of ice cream products, as well as royalty income, franchise fees, and license fees. The operating results...

  • Page 89
    ... 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...

  • Page 90
    ... (in thousands): Net income (loss) of equity method investments Fiscal year ended December 26, 2015 December 27, 2014 December 28, 2013 Dunkin' Donuts International Baskin-Robbins International Total reportable segments Other Total net income (loss) of equity method investments $ $ 1,295 10,535...

  • Page 91
    ... of its common stock based on a weighted average cost per share of $41.51 over the term of the October ASR Agreement. Additionally, during fiscal year 2015, the Company repurchased a total of 2,106,881 shares of common stock in the open market at a weighted average cost per share of $47.47 from...

  • Page 92
    ... our board of directors approved an increase to the next quarterly dividend to $0.30 per share of common stock, payable March 16, 2016 to shareholders of record as of the close of business on March 7, 2016. (14) Equity incentive plans The Dunkin' Brands Group, Inc. 2015 Omnibus Long-Term Incentive...

  • Page 93
    ... by the Company's stock price and certain assumptions related to the Company's stock and employees' exercise behavior. The following weighted average assumptions were utilized in determining the fair value of the 2011 Plan options granted during fiscal years 2015, 2014, and 2013: Fiscal year ended...

  • Page 94
    ...,096. The restricted shares vest in full on July 31, 2016 based on a service condition, and have a grant-date fair value of $51.67 per share, which was determined on the date of grant based on the Company's closing stock price. During fiscal year 2015, the Company granted restricted shares of 21,101...

  • Page 95
    ... operations differed from the expense computed using the statutory federal income tax rate of 35% due to the following: Fiscal year ended December 26, 2015 December 27, 2014 December 28, 2013 Computed federal income tax expense, at statutory rate Impairment of investment in Japan JV State income...

  • Page 96
    ... and equipment Deferred compensation liabilities Deferred gift cards and certificates Deferred income Real estate reserves Franchise rights and other intangibles Unused net operating losses and foreign tax credits Other current liabilities Capital loss Other Valuation allowance Total $ 4,484...

  • Page 97
    ... the annual effective tax rate. The Company's major tax jurisdictions subject to income tax are the United States and Canada. For Canada, the Company has open tax years dating back to tax years ended December 2006 and finalized its audit for the tax periods 2009 through 2012 during fiscal year 2014...

  • Page 98
    ...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...

  • Page 99
    ...consolidated balance sheets. The Company made net payments to its equity method investees totaling approximately $3.2 million, $2.6 million, and $3.8 million, in fiscal years 2015, 2014, and 2013, respectively, primarily for the purchase of ice cream products. In prior fiscal years, the Company made...

  • Page 100
    ... in other assets in the consolidated balance sheets. During fiscal years 2015 and 2014, the Company recognized sales of ice cream and other products of $4.0 million and $5.8 million, respectively, in the consolidated statements of operations from the sale of ice cream products to the Australia...

  • Page 101
    ...Company's board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America...

  • Page 102
    ... Board (United States), the consolidated balance sheets of Dunkin' Brands Group, Inc. and subsidiaries as of December 26, 2015 and December 27, 2014, and the related consolidated statements of operations, comprehensive income, stockholders' equity (deficit), and cash flows for each of the years...

  • Page 103
    ... 18, 2016. Nigel Travis, age 66, has served as Chief Executive Officer of Dunkin' Brands since January 2009 and assumed the additional role of Chairman of the Board in May 2013. From 2005 through 2008, Mr. Travis served as President and Chief Executive Officer, and on the board of directors of Papa...

  • Page 104
    ...Donuts U.S. and Canada. Mr. Murphy joined Dunkin' Brands in 2004 and prior to his current position, served as Senior Vice President and Chief Supply Officer. Mr. Murphy's prior experience includes 10 years of global management consulting with A.T. Kearney. Mr. Murphy serves on the board of directors...

  • Page 105
    ... the with SEC on February 22, 2013) Dunkin' Brands Group, Inc. 2015 Omnibus Long-Term Incentive Plan (incorporated by reference to Exhibit 4.4 to the Company's Registration Statement on Form S-8, File No. 333-204454) Dunkin' Brands Group, Inc. Employee Stock Purchase Plan (incorporated by reference...

  • Page 106
    ... LLC, BR IP Holder, BR UK Franchising LLC, Dunkin' Donuts Franchising LLC, Baskin-Robbins Franchising LLC, DB Real Estate Assets I LLC, DB Real Estate Assets II LLC, each as Guarantor, Dunkin' Brands, Inc., as manager, certain conduit investors, financial institutions and funding agents, and Co...

  • Page 107
    ... following financial information from the Company's Annual Report on Form 10-K for the fiscal year ended December 27, 2014, formatted in Extensible Business Reporting Language, (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Operations, (iii) the Consolidated Statements of...

  • Page 108
    ... duly authorized. Date: February 18, 2016 DUNKIN' BRANDS GROUP, INC. By: Name: Title: /s/ Nigel Travis Nigel Travis Chairman and Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of...

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    DUNKIN' BRANDS GROUP, INC. 130 ROYALL STREET CANTON, MA 02021