Baskin Robbins 2011 Annual Report Download - page 82

DUNKIN’ BRANDS GROUP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2011 and December 25, 2010
(1) Description of business and organization
Dunkin’ Brands Group, Inc. (“DBGI”) and subsidiaries (collectively, “the Company”) is one of the world’s
largest 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, and
related products. Through our Baskin-Robbins brand, we develop and franchise restaurants featuring ice cream,
frozen beverages, and related products. Additionally, our subsidiaries located in Canada and the United Kingdom
(“UK”) manufacture and/or distribute Baskin-Robbins ice cream products to Baskin-Robbins franchisees and
licensees in various international markets.
DBGI is majority-owned by investment funds affiliated with Bain Capital Partners, LLC, The Carlyle Group, and
Thomas H. Lee Partners, L.P. (collectively, the “Sponsors” or “BCT”).
Throughout these financial statements, “the Company,” “we,” “us,” “our,” and “management” refer to DBGI and
subsidiaries taken as a whole.
(2) Summary of significant accounting policies
(a) 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 fiscal years 2011, 2010, and 2009 reflect the results of operations for the 53-week period ended
December 31, 2011, and the 52-week periods ended December 25, 2010 and December 26, 2009, respectively.
(b) Basis of presentation and consolidation
The accompanying consolidated financial statements include the accounts of DBGI and subsidiaries and have
been prepared in accordance with accounting principles generally accepted in the United States of America
(“U.S. GAAP”). All significant transactions and balances between subsidiaries have been eliminated in
consolidation.
We consolidate entities in which we have a controlling financial interest, the usual condition of which is
ownership of a majority voting interest. We also consider for consolidation an entity, in which we have certain
interests, where the controlling financial interest may be achieved through arrangements that do not involve
voting interests. Such an entity, known as a variable interest entity (“VIE”), is required to be consolidated by its
primary beneficiary. The primary beneficiary is the entity that possesses the power to direct the activities of the
VIE that most significantly impact its economic performance and has the obligation to absorb losses or the right
to receive benefits from the VIE that are significant to it. The principal entities in which we possess a variable
interest include franchise entities, the advertising funds (see note 4), and our investments in joint ventures. We do
not possess any ownership interests in franchise entities, except for our investments in various joint ventures that
are accounted for under the equity method. Additionally, we generally do not provide financial support to
franchise entities in a typical franchise relationship. As our franchise and license arrangements provide our
franchisee and licensee entities the power to direct the activities that most significantly impact their economic
performance, we do not consider ourselves the primary beneficiary of any such entity that might be a VIE. Based
on the results of our analysis of potential VIEs, we have not consolidated any franchise or other entities. The
-72-