Dunkin' Donuts 2013 Annual Report Download - page 103

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concentration of risk as it is invested in a limited number of investments. The risk is mitigated as the funds consists of a diverse
range of underlying investments. The allocation of the assets within the plan consisted of the following:
December 28,
2013
December 29,
2012
Cash and short-term investments 35% —%
Equity securities —60
Debt securities 65 39
Other —1
The actuarial assumptions used in determining the present value of accrued pension benefits at December 28, 2013 and
December 29, 2012 were as follows:
December 28,
2013
December 29,
2012
Discount rate 2.65% 2.70%
Average salary increase for pensionable earnings ——
The discount rate used in determining the present value of accrued pension benefits at December 28, 2013 reflects the estimate
of the rate at which pension benefits could be effectively settled. No future salary increases are assumed as of December 28,
2013 or December 29, 2012 as a result of the termination of the plan.
The actuarial assumptions used in determining the present value of our net periodic benefit cost were as follows:
December 28,
2013
December 29,
2012
December 31,
2011
Discount rate 2.70% 5.25% 5.50%
Average salary increase for pensionable earnings — 3.25 3.25
Expected return on plan assets 4.50 6.00 6.00
The expected return on plan assets was determined based on the Canadian Pension Plan’s target asset mix, expected long-term
asset class returns based on a mean return over a 30-year period using a Monte Carlo simulation, the underlying long-term
inflation rate, and expected investment expenses.
The accumulated benefit obligation was $8.2 million and $8.3 million at December 28, 2013 and December 29, 2012,
respectively. We recognize a net liability or asset and an offsetting adjustment to accumulated other comprehensive income to
report the funded status of the Canadian Pension Plan. At December 28, 2013, the net liability for the funded status of the
Canadian Pension Plan was included in other current liabilities in consolidated balance sheets. Upon approval of the plan
termination by the FSCO, the Company intends on funding the plan deficit and purchasing annuities to provide accrued
benefits to participants.
(19) Related-party transactions
(a) Sponsors
Through the first quarter of fiscal year 2012, DBGI was 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").
In April 2012, certain existing stockholders, including the Sponsors, sold a total of 30,360,000 shares of our common stock (see
note 13(a)). In August 2012, the Sponsors sold all of their remaining shares through a registered offering and related repurchase
of shares by the Company (see notes 13(a) and 13(c)). One representative of each Sponsor continues to serve on the board of
directors.
Prior to the closing of the Company’s initial public offering on August 1, 2011, the Company was charged an annual
management fee by the Sponsors of $1.0 million per Sponsor, payable in quarterly installments. In connection with the
completion of the initial public offering in August 2011, the Company incurred an expense of approximately $14.7 million
related to the termination of the Sponsor management agreement. Including this termination fee, the Company recognized
$16.4 million of expense during fiscal year 2011 related to Sponsor management fees, which is included in general and
administrative expenses, net in the consolidated statements of operations.