Baskin Robbins 2012 Annual Report Download - page 38

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-28-
Fiscal Year
2012 2011 2010 2009 2008
(Unaudited, $ in thousands)
Operating income (loss) $ 239,429 205,309 193,525 184,545 (140,893)
Adjustments:
Amortization of other intangible assets 26,943 28,025 32,467 35,994 37,848
Impairment charges 1,278 2,060 7,075 8,517 331,862
Sponsor termination fee — 14,671———
Secondary offering costs 4,783 1,899———
Peterborough plant closure(a) 14,044————
Korea joint venture impairment, net(b) — 18,776———
Bertico litigation(c) 20,680————
Adjusted operating income $ 307,157 270,740 233,067 229,056 228,817
Net income (loss) attributable to Dunkin'
Brands $ 108,308 34,442 26,861 35,008 (269,898)
Adjustments:
Amortization of other intangible assets 26,943 28,025 32,467 35,994 37,848
Impairment charges 1,278 2,060 7,075 8,517 331,862
Sponsor termination fee — 14,671———
Secondary offering costs 4,783 1,899———
Peterborough plant closure(a) 14,044————
Korea joint venture impairment, net(b) — 18,776———
Bertico litigation(c) 20,680————
Loss (gain) on debt extinguishment and
refinancing transactions 3,963 34,222 61,955 (3,684)—
Tax impact of adjustments, excluding
Bertico litigation(d) (20,404) (32,351)(40,599)(16,331)(30,093)
Tax impact of Bertico adjustment(e) (3,980) ————
Income tax audit settlements(f) (10,514) ————
State tax apportionment(g) 4,599————
Adjusted net income $ 149,700 101,744 87,759 59,504 69,719
(a) Represents costs incurred in fiscal year 2012 related to the announced closure of the Baskin-Robbins ice
cream manufacturing plant in Peterborough, Canada, including $3.4 million of severance and other payroll-
related costs, $4.2 million of accelerated depreciation, $2.7 million of incremental costs of ice cream
products, and $1.6 million of other transition-related costs. Amount also reflects the one-time delay in
revenue recognition, net of related cost of ice cream products, related to the shift in manufacturing to Dean
Foods of $2.1 million.
(b) 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, of $1.0 million resulting from the allocation of the
impairment charge to the underlying intangible and long-lived assets of the joint venture.
(c) 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 $C16.4 million (approximately $15.9
million), plus costs and interest.
(d) Tax impact of adjustments calculated at a 40% effective tax rate for each period presented, excluding the
goodwill impairment charge in fiscal year 2008 as the goodwill is not deductible for tax purposes, the Korea
joint venture impairment in fiscal year 2011 as there was no tax impact related to that charge, and the Bertico
litigation adjustment for which the tax impact is calculated separately.
(e) Tax impact of Bertico litigation adjustment calculated as if the incremental reserve had not been recorded,
considering statutory tax rates and deductibility.