Baskin Robbins 2015 Annual Report Download - page 53

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General and administrative expenses decreased $4.5 million, or 2.0%, in fiscal year 2014 driven primarily by a $7.5 million
charge recorded in the prior year related to a third-party product volume guarantee, offset by additional breakage income, net of
gift card program costs, recorded in fiscal year 2013 of $5.4 million on unredeemed Dunkin’ Donuts gift card balances. The
balance of the fluctuation in general and administrative expenses is due primarily to favorable litigation settlements, offset by
an increase in personnel costs, inclusive of additional share-based compensation expense and a reduction in incentive
compensation payouts.
Depreciation and amortization decreased $3.8 million in fiscal year 2014 resulting primarily from assets becoming fully
depreciated and assets being written-off upon disposal, as well as a reduction of depreciation on leasehold improvements at the
Company’s corporate headquarters due to the extension of the lease term.
The increase in long-lived asset impairment charges in fiscal year 2014 of $0.9 million was driven by the impairment of
corporate assets and the timing of lease terminations in the ordinary course, which results in the write-off of favorable lease
intangible assets and leasehold improvements.
Net income of equity method investments decreased $3.5 million in fiscal year 2014 driven by a decrease in income from our
Japan and South Korea joint ventures, offset by a $0.9 million impairment of our investment in, as well as losses incurred by,
the Dunkin’ Donuts Spain joint venture in fiscal year 2013.
Other operating income, net includes gains recognized in connection with the sale of real estate and fluctuates based on the
timing of such transactions. Additionally, other operating income, net of $7.8 million for fiscal year 2014 includes a gain
recognized in connection with the sale of the company-operated restaurants in the Atlanta market. Other operating income, net,
of $9.2 million for fiscal year 2013 includes gains recognized on the sale of 80% of our Baskin-Robbins Australia business, as
well as income recognized upon receipt of insurance proceeds related to Hurricane Sandy.
Fiscal year Increase (Decrease)
2014 2013 $ %
(In thousands, except percentages)
Interest expense, net $ 67,824 79,831 (12,007) (15.0)%
Loss on debt extinguishment and refinancing transactions 13,735 5,018 8,717 173.7 %
Other losses, net 1,566 1,799 (233) (13.0)%
Total other expense $ 83,125 86,648 (3,523) (4.1)%
The decrease in net interest expense for fiscal year 2014 of $12.0 million resulted primarily from the refinancing transaction
that occurred in February 2014, which resulted in a decrease in the weighted average interest rate on the long-term debt
compared to the prior year and a decrease in amortization of capitalized debt issuance costs and original issue discount.
The loss on debt extinguishment and refinancing transactions for fiscal year 2014 of $13.7 million resulted from the February
2014 refinancing transaction. The loss on debt extinguishment and refinancing transactions for fiscal year 2013 of $5.0 million
resulted from the February 2013 refinancing transaction.
The decrease in other losses, net, for fiscal year 2014 was driven primarily by foreign exchange gains and losses due primarily
to fluctuations in the U.S. dollar against the Australian dollar and the pound sterling.
Fiscal year
2014 2013
(In thousands, except percentages)
Income before income taxes $ 255,733 218,088
Provision for income taxes 80,170 71,784
Effective tax rate 31.3% 32.9%
The effective tax rate for fiscal year 2014 was lower than normal primarily as a result of the net reversal of approximately $7.0
million of reserves for uncertain tax positions for which settlement with taxing authorities was reached during fiscal year 2014
or were otherwise deemed effectively settled. Additionally, the effective tax rate for fiscal year 2014 reflects a net tax benefit
of $8.5 million related to the restructuring of our Canadian subsidiaries, which included a legal entity conversion of Dunkin’
Brands Canada, Ltd. to a British Columbia unlimited liability company.
The effective tax rate for fiscal year 2013 was favorably impacted by the net reversal of approximately $8.4 million of reserves
for uncertain tax positions for which settlement with the taxing authorities was reached in fiscal year 2014.