Baskin Robbins 2011 Annual Report Download - page 53

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Adjusted operating income and adjusted net income are non-GAAP measures reflecting operating income and net
income adjusted for amortization of intangible assets, impairment charges, Sponsor management agreement
termination fee, and secondary offering costs, and, in the case of adjusted net income, loss on debt
extinguishment and refinancing transactions, net of the tax impact of such adjustments. The Company uses
adjusted operating income and adjusted net income as key performance measures for the purpose of evaluating
performance internally. We also believe adjusted operating income and adjusted net income provide our
investors with useful information regarding our historical operating results. These non-GAAP measurements are
not intended to replace the presentation of our financial results in accordance with GAAP. Use of the 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, determined under GAAP as follows:
Fiscal year
2009 2010 2011
Operating income ............................... $184,545 193,525 205,309
Adjustments:
Sponsor termination fee ...................... — — 14,671
Amortization of other intangible assets .......... 35,994 32,467 28,025
Impairment charges ......................... 8,517 7,075 2,060
Korea joint venture impairment(1) .............. – – 18,776
Secondary offering costs ..................... – – 1,899
Adjusted operating income ........................ $229,056 233,067 270,740
Net income .................................... $ 35,008 26,861 34,442
Adjustments:
Sponsor termination fee ...................... — — 14,671
Amortization of other intangible assets .......... 35,994 32,467 28,025
Impairment charges ......................... 8,517 7,075 2,060
Korea joint venture impairment(1) .............. — — 18,776
Secondary offering costs ..................... — — 1,899
Loss (gain) on debt extinguishment and refinancing
transactions .............................. (3,684) 61,955 34,222
Tax impact of adjustments(2) .................. (16,331) (40,599) (32,351)
Adjusted net income ............................. $ 59,504 87,759 101,744
(1) Amount consists of an impairment of the investment in the Korea joint venture of $19.8 million, less a
reduction in depreciation and amortization, net of tax, resulting from the impairment of the underlying
intangible and long-lived assets of $976,000.
(2) Tax impact of adjustments calculated at a 40% effective tax rate for each period presented, excluding the
Korea joint venture impairment in fiscal year 2011 as there was no tax impact related to that charge.
Fiscal year 2011 compared to fiscal year 2010
Overall growth in systemwide sales of 9.1% for fiscal year 2011, or 7.4% on a 52-week basis, resulted from the
following:
• Dunkin’ Donuts U.S. systemwide sales growth of 9.4%, which was the result of comparable store sales
growth of 5.1% driven by both increased average ticket and transaction counts, net restaurant
development of 243 restaurants in 2011, and approximately 190 basis points of growth attributable to
the extra week in fiscal year 2011;
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