Baskin Robbins 2013 Annual Report Download - page 104

Download and view the complete annual report

Please find page 104 of the 2013 Baskin Robbins annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 116

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116

-94-
At December 29, 2012, certain affiliates of the Sponsors held $52.4 million, respectively of term loans, issued under the
Company’s senior credit facility. The terms of these loans were identical to all other term loans issued to unrelated lenders in
the senior credit facility. As of December 28, 2013, there were no term loans held by affiliates of the Sponsors.
The Sponsors have historically held a substantial interest in our Company as well as several other entities. The existence of
such common ownership and management control could result in differences within our operating results or financial position
than if the entities were autonomous; however, we believe such transactions were negotiated at arm's length. The Company
made payments to entities in which the Sponsors have ownership interests totaling approximately $2.1 million, $1.6 million,
and $979 thousand during fiscal years 2013, 2012, and 2011, respectively, primarily for the purchase of consulting services,
training services, and leasing of restaurant space. At December 29, 2012, the Company had a net payable of $150 thousand to
these entities. At December 28, 2013, the Company had no net payable to these entities.
(b) Equity method investments
The Company recognized royalty income from its equity method investments as follows (in thousands):
Fiscal year ended
December 28,
2013
December 29,
2012
December 31,
2011
BR Japan $ 2,097 2,549 2,473
BR Korea 4,156 3,662 3,371
Spain JV 130——
$ 6,383 6,211 5,844
At December 28, 2013 and December 29, 2012, the Company had $1.4 million and $1.2 million, respectively, of royalties
receivable from its equity method investments which were recorded in accounts receivable, net, in the consolidated balance
sheets.
The Company made net payments to its equity method investments totaling approximately $3.8 million, $1.6 million, and $2.8
million, in fiscal years 2013, 2012, and 2011, respectively, primarily for the purchase of ice cream products and incentive
payments.
The Company made loans of $2.1 million and $666 thousand during fiscal years 2013 and 2012, respectively to the Spain JV.
As of December 28, 2013 and December 29, 2012, the Company had $2.7 million and $666 thousand, respectively, of notes
receivable from the Spain JV, which are included in other assets in the consolidated balance sheets. During the third quarter of
fiscal year 2013, the Company fully reserved all outstanding notes and accounts receivable from the Spain JV, and fully
impaired its equity investment in the Spain JV (see note 6).
During fiscal year 2013, the Company recognized sales of ice cream products of $4.8 million in the consolidated statements of
operations from the sale of ice cream products to the Australia JV. As of December 28, 2013, the Company had $733 thousand
of net receivables from the Australia JV, consisting of accounts receivable and notes and other receivables, net of other current
liabilities.
(c) Board of directors
Certain family members of one of our directors, who retired in May 2013, hold an ownership interest in an entity that owns and
operates Dunkin’ Donuts restaurants and holds the right to develop additional restaurants under store development agreements.
During fiscal years 2013, 2012, and 2011, the Company received $343 thousand, $961 thousand, and $713 thousand,
respectively, in royalty and rental payments from this entity. During fiscal year 2013, the Company recognized $6 thousand of
income related to initial franchise fees from this entity. All material terms of the franchise and store development agreements
with this entity are consistent with other unrelated franchisees in the market.
(20) Closure of manufacturing plant
During the second quarter of 2012, the Company’s board of directors approved a plan to close our Peterborough, Ontario,
Canada manufacturing plant, which supplied ice cream to certain of Baskin-Robbins' international markets. Manufacturing of
ice cream products that had been produced in Peterborough began transitioning to existing third-party partner suppliers during
the third quarter of 2012, and production ceased at the plant at the end of September 2012. The majority of the costs and
activities related to the closure of the plant and transition to third-party suppliers occurred in fiscal year 2012, with the