Dunkin' Donuts 2015 Annual Report Download - page 42

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(d) Amount consists of an other-than-temporary impairment of the investment in the South Korea joint venture of $19.8
million, less a reduction in depreciation and amortization of $1.0 million resulting from the allocation of the impairment
charge to the underlying intangible and long-lived assets of the joint venture.
(e) For fiscal year 2012, the adjustment represents the incremental legal reserve recorded in the second quarter of 2012
related to the Quebec Superior Court’s ruling in the Bertico litigation, in which the Court found for the Plaintiffs and
issued a judgment against Dunkin’ Brands in the amount of approximately C$16.4 million (approximately $15.9 million),
plus costs and interest. The adjustment for fiscal year 2015 represents the net reduction to legal reserves for the Bertico
litigation and related matters of $2.8 million, as a result of the Quebec Court of Appeals (Montreal) ruling to reduce the
damages assessed against the Company in the Bertico litigation from approximately C$16.4 million to approximately
C$10.9 million, plus costs and interest.
(f) Tax impact of adjustments calculated at a 40% effective tax rate for each period presented, excluding the Japan and South
Korea joint venture impairments as there was no tax impact related to those charges and the Bertico litigation adjustment
for which the tax impact is calculated separately.
(g) Tax impact of Bertico litigation adjustment calculated as if the incremental reserve had not been recorded, considering
statutory tax rates and deductibility.
(h) Represents income tax benefits resulting from the settlement of historical tax positions settled during the prior period,
primarily related to the accounting for the acquisition of the Company by private equity firms in 2006.
(i) Represents the net tax impact of converting Dunkin’ Brands Canada Ltd. to Dunkin’ Brands Canada ULC.
(j) 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) Represents period end points of distribution.
(9) Represents the growth in average weekly sales for franchisee- and company-operated restaurants that have been open
at least 78 weeks (approximately 18 months) that have reported sales in the current and comparable prior year week.
Previously, U.S. comparable store sales growth were calculated including only sales from franchisee- and company-
operated restaurants that had been open at least 54 weeks and that had reported sales in the current and comparable
prior year week. Comparable store sales growth for Dunkin’ Donuts U.S. and Baskin-Robbins U.S. for all prior
periods presented have been revised to include only those restaurants that have been open at least 78 weeks to conform
to the current period calculation.
(10) Represents the growth in local currency average weekly sales for franchisee-operated restaurants, including joint
ventures, that have been open at least 54 weeks and that have reported sales in the current and comparable prior year
week. International comparable store sales growth has not been revised at this time to include only sales from
restaurants that have been open at least 78 weeks, similar to the U.S., given that store-level sales information resides
on multiple, non-uniform systems owned and controlled by our international partners. Comparable store sales growth
data was not available for our international segments until fiscal year 2012.
(11) Franchisee-reported sales include sales at franchisee-operated restaurants, including joint ventures. While we do not
record sales by franchisees or licensees as revenue and such sales are not included in our consolidated financial
statements, we believe that this operating measure is important in obtaining an understanding of our financial
performance. We believe franchisee-reported sales information aids in understanding how we derive royalty revenue
and in evaluating our performance relative to competitors.
(12) Company-operated POD sales include sales at restaurants majority owned or operated by Dunkin’ Brands.
(13) Systemwide sales growth represents the percentage change in sales at both franchisee- and company-operated
restaurants from the comparable period of the prior year. Changes in systemwide sales are driven by changes in
average comparable store sales and changes in the number of restaurants.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion of our financial condition and results of operations should be read in conjunction with the selected
financial data and the audited financial statements and related notes appearing elsewhere in this Annual Report on Form 10-K.
This discussion contains forward-looking statements about our markets, the demand for our products and services and our
future results and involves numerous risks and uncertainties. Generally these statements can be identified by the use of words
such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “feel,” “forecast,” “intend,” “may,” “plan,” “potential,”
“project,” “should” or “would” and similar expressions intended to identify forward-looking statements, although not all
forward-looking statements contain these identifying words. Our forward-looking statements are subject to risks and
uncertainties, which may cause actual results to differ materially from those projected or implied by the forward-looking
statement. Forward-looking statements are based on current expectations and assumptions and currently available data and
are neither predictions nor guarantees of future events or performance. You should not place undue reliance on forward-
looking statements, which speak only as of the date hereof. See “Risk factors” for a discussion of factors that could cause our
actual results to differ from those expressed or implied by forward-looking statements.