Baskin Robbins 2013 Annual Report Download - page 39

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-29-
Fiscal Year
2013 2012 2011 2010 2009
(Unaudited, $ in thousands)
Operating income $ 304,736 239,429 205,309 193,525 184,545
Adjustments:
Amortization of other intangible assets 26,943 26,943 28,025 32,467 35,994
Impairment charges 563 1,278 2,060 7,075 8,517
Third-party product volume guarantee 7,500————
Sponsor termination fee — — 14,671 — —
Secondary offering costs — 4,783 1,899 — —
Peterborough plant closure(a) 654 14,044———
Korea joint venture impairment, net(b) — — 18,776 — —
Bertico litigation(c) — 20,680———
Adjusted operating income $ 340,396 307,157 270,740 233,067 229,056
Net income attributable to Dunkin' Brands $ 146,903 108,308 34,442 26,861 35,008
Adjustments:
Amortization of other intangible assets 26,943 26,943 28,025 32,467 35,994
Impairment charges 563 1,278 2,060 7,075 8,517
Third-party product volume guarantee 7,500————
Sponsor termination fee — — 14,671 — —
Secondary offering costs — 4,783 1,899 — —
Peterborough plant closure(a) 654 14,044———
Korea joint venture impairment, net(b) — — 18,776 — —
Bertico litigation(c) — 20,680———
Loss (gain) on debt extinguishment and
refinancing transactions 5,018 3,963 34,222 61,955 (3,684)
Tax impact of adjustments, excluding
Bertico litigation(d) (16,271) (20,404)(32,351)(40,599)(16,331)
Tax impact of Bertico adjustment(e) —(3,980)———
Income tax audit settlements(f) (8,417) (10,514)———
State tax apportionment(g) 2,868 4,599———
Adjusted net income $ 165,761 149,700 101,744 87,759 59,504
(a) For fiscal year 2013, the adjustment represents transition-related general and administrative costs incurred related to the
closure of the Baskin-Robbins ice cream manufacturing plant in Peterborough, Canada, such as information technology
integration, project management, and transportation costs. For fiscal year 2012, the adjustment included $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. The amount for fiscal year 2012 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 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.
(f) Represents income tax benefits resulting from the settlement of historical tax positions settled during the period, primarily
related to the accounting for the acquisition of the Company by private equity firms in 2006.