Dunkin' Brands Results

Dunkin' Brands Reports Third Quarter 2018 Results

Dunkin' Brands

Third quarter highlights include:

  • Dunkin' U.S. comparable store sales increase of 1.3%
  • Baskin-Robbins U.S. comparable store sales increase of 1.8%
  • Added 77 net new Dunkin' and Baskin-Robbins locations globally including 52 net new Dunkin' locations in the U.S.
  • Revenues increased 6.0%
  • Diluted EPS increased by 75.6% to $0.79
  • Diluted adjusted EPS increased by 69.4% to $0.83

Dunkin' Brands Group, Inc. (Nasdaq: DNKN), the parent company of Dunkin' and Baskin-Robbins (BR), yesterday reported results for the third quarter ended September 29, 2018.

"For the third quarter 2018, we delivered positive comparable store sales for all four of our business segments.  Dunkin' U.S. comparable store sales growth was led by strong beverage sales, coupled with new product innovation, and the Dunkin' Run snacking platform which delivered our highest afternoon comparable store sales growth in more than two years," said David Hoffmann, Dunkin' Brands Chief Executive Officer and President Dunkin' U.S. "Additionally, our new simplified branding for Dunkin' and our recently announced plans to transform the espresso experience at Dunkin' demonstrate our commitment to our beverage-led strategy and, importantly, we have strong alignment with our franchisees around the world, as evidenced by their record attendance at our 2018 Global Convention." 

"Earlier this year we announced that we would be investing approximately $100 million into Dunkin' U.S., a substantial amount of which will be in equipment to support our multi-year plan to expand our beverage portfolio beyond traditional drip coffee, including new espresso equipment. We, along with our franchisees, who are significantly investing in this new program, are excited to introduce the new Dunkin' espresso to America in the fourth quarter," said Kate Jaspon, Dunkin' Brands Chief Financial Officer.  "We are also pleased to have completed our previously announced $650 million accelerated share repurchase program during the third quarter, demonstrating our continued commitment to utilizing our strong balance sheet to return capital to shareholders."

THIRD QUARTER 2018 KEY FINANCIAL HIGHLIGHTS

(Unaudited, $ in millions, except per share data)

Three months ended

Increase (Decrease)

Amounts and percentages may not recalculate due to rounding

September 29,

 2018

September 30,

 2017(1)

$ / #

%

Financial data:

    Revenues

$

350.0

330.1

19.9

6.0

%

    Operating income

111.6

105.3

6.3

6.0

%

    Operating income margin

31.9

%

31.9

%

    Adjusted operating income(2)

$

116.9

111.1

5.7

5.2

%

    Adjusted operating income margin(2)

33.4

%

33.7

%

    Net income

$

66.1

41.2

24.9

60.5

%

    Adjusted net income(2)

69.9

44.7

25.2

56.3

%

    Earnings per share:

       Common–basic

0.80

0.46

0.34

73.9

%

       Common–diluted

0.79

0.45

0.34

75.6

%

       Diluted adjusted earnings per share(2)

0.83

0.49

0.34

69.4

%

       Weighted average number of common shares – diluted (in millions)

84.1

91.4

(7.3)

(8.0)

%

Systemwide sales(3)

$

3,067.8

2,914.8

153.0

5.2

%

Comparable store sales growth (decline):

    Dunkin' U.S.

1.3

%

0.6

%

    BR U.S.

1.8

%

(0.4)

%

    Dunkin' International

2.5

%

1.3

%

    BR International

7.5

%

(4.3)

%

Development data:

    Consolidated global net POD development

77

137

(60)

(43.8)

%

    Dunkin' global PODs at period end

12,740

12,435

305

2.5

%

    BR global PODs at period end

8,024

7,944

80

1.0

%

    Consolidated global PODs at period end

20,764

20,379

385

1.9

%

(1) Prior period amounts have been restated to reflect the adoption of new revenue recognition guidance. See "Adoption of New Accounting Standard" for further detail.

(2) Adjusted operating income, adjusted operating income margin, and adjusted net income are non-GAAP measures reflecting operating income and net income adjusted for amortization of intangible assets, long-lived asset impairments, and certain other items, net of the tax impact of such adjustments in the case of adjusted net income. Diluted adjusted earnings per share is a non-GAAP measure calculated using adjusted net income. See "Non-GAAP Measures and Statistical Data" and "Dunkin' Brands Group, Inc. Non-GAAP Reconciliations" for further detail.

(3) Systemwide sales include sales at franchisee-operated restaurants, including joint ventures. While we do not record sales by franchisees, licensees, or joint ventures as revenue, and such sales are not included in our consolidated financial statements, we believe that this operating measure is important in obtaining an understanding of our financial performance. We believe systemwide sales information aids in understanding how we derive royalty revenue and in evaluating our performance relative to competitors.

Global systemwide sales growth of 5.2% in the third quarter was primarily attributable to global store development, Dunkin' U.S. comparable store sales growth, and Baskin-Robbins International comparable store sales growth.

Dunkin' U.S. comparable store sales grew 1.3% in the third quarter as an increase in average ticket was partially offset by a decrease in traffic. Growth was driven primarily by iced coffee, both traditional and cold brew, as well as frozen beverages and breakfast sandwiches.

Baskin-Robbins U.S. comparable store sales grew 1.8% during the third quarter as an increase in average ticket was partially offset by a decrease in traffic. Growth was driven by beverages including shakes and smoothies, as well as the take-home category.

In the third quarter, Dunkin' Brands franchisees and licensees opened 77 net new restaurants globally. This included 52 net new Dunkin' U.S. locations, 16 net new Baskin-Robbins International locations, and 12 net new Dunkin' International locations, offset by net closures of 3 Baskin-Robbins U.S. locations. Additionally, Dunkin' U.S. franchisees remodeled 31 restaurants and Baskin-Robbins U.S. franchisees remodeled 6 restaurants during the quarter.

Revenues for the third quarter increased $19.9 million, or 6.0%, compared to the prior year period due primarily to increased advertising fees and related income, as well as an increase in royalty income as a result of systemwide sales growth.

Operating income and adjusted operating income for the third quarter increased $6.3 million, or 6.0%, and $5.7 million, or 5.2%, respectively, from the prior year period primarily as a result of the increase in royalty income, offset by an increase in general and administrative expenses due primarily to expenses incurred in connection with our 2018 Global Convention held in the third quarter of fiscal year 2018.

Net income and adjusted net income for the third quarter increased by $24.9 million, or 60.5%, and $25.2 million, or 56.3%, respectively, compared to the prior year period primarily as a result of a decrease in income tax expense and the increases in operating income and adjusted operating income, respectively, offset by an increase in net interest expense. Income tax expense for the third quarter of 2017 was unfavorably impacted by an $8.9 million write-down of foreign tax credit carryforwards, whereas income tax expense for the third quarter of 2018 was favorably impacted by excess tax benefits from share-based compensation of $7.4 million. The decrease in income tax expense was also driven by a lower tax rate due to the enactment of the Tax Cuts and Jobs Act in the fourth quarter of fiscal year 2017. The increase in net interest expense was driven by additional borrowings incurred in conjunction with the refinancing transaction completed during the fourth quarter of fiscal year 2017.

Diluted earnings per share and diluted adjusted earnings per share for the third quarter increased by 75.6% to $0.79 and 69.4% to $0.83, respectively, compared to the prior year period as a result of the increases in net income and adjusted net income, respectively, as well as a decrease in shares outstanding. The decrease in shares outstanding from the prior year period was due primarily to the repurchase of shares since the beginning of the third quarter of fiscal year 2017, offset by the exercise of stock options. Excluding the impact of recognized excess tax benefits, both diluted earnings per share and diluted adjusted earnings per share would have been lower by approximately $0.09 and $0.01 for the third quarter of fiscal years 2018 and 2017, respectively.

THIRD QUARTER 2018 SEGMENT RESULTS

Amounts and percentages may not recalculate due to rounding

Three months ended

Increase (Decrease)

Dunkin' U.S.

September 29,

 2018

September 30,

 2017(1)

$ / #

%

(Unaudited, $ in thousands except as otherwise noted)

Revenues:

Royalty income

$

124,805

118,831

5,974

5.0

%

Franchise fees

4,840

4,638

202

4.4

%

Rental income

26,637

26,786

(149)

(0.6)

%

Other revenues

1,002

933

69

7.4

%

Total revenues

$

157,284

151,188

6,096

4.0

%

Segment profit

$

121,667

115,398

6,269

5.4

%

Comparable store sales growth

1.3

%

0.6

%

Systemwide sales (in millions)(2)

$

2,266.9

2,166.3

100.7

4.6

%

Points of distribution

9,313

9,015

298

3.3

%

Gross openings

95

103

(8)

(7.8)

%

Net openings

52

67

(15)

(22.4)

%

(1) Prior period amounts have been restated to reflect the adoption of new revenue recognition guidance. See "Adoption of New Accounting Standard" for further detail.

(2) Systemwide sales include sales at franchisee-operated restaurants, including joint ventures. We do not record sales by franchisees, licensees, or joint ventures as revenue and such sales are not included in our consolidated financial statements. See "Non-GAAP Measures and Statistical Data" for further detail.

Dunkin' U.S. third quarter revenues of $157.3 million represented an increase of 4.0% compared to the prior year period. The increase was primarily a result of an increase in royalty income driven by systemwide sales growth.

Dunkin' U.S. segment profit in the third quarter increased to $121.7 million, an increase of $6.3 million over the prior year period, driven primarily by the increase in royalty income and an increase in rental margin due primarily to the timing of expenses incurred to record lease-related liabilities. These increases were offset by an increase in general and administrative expenses, due primarily to expenses incurred in the third quarter of fiscal year 2018 to support our Blueprint for Growth initiatives.

Amounts and percentages may not recalculate due to rounding

Three months ended

Increase (Decrease)

Dunkin' International

September 29,

 2018

September 30,

 2017(1)

$ / #

%

(Unaudited, $ in thousands except as otherwise noted)

Revenues:

Royalty income

$

5,192

4,442

750

16.9

%

Franchise fees

1,054

460

594

129.1

%

Other revenues

10

11

(1)

(9.1)

%

Total revenues

$

6,256

4,913

1,343

27.3

%

Segment profit

$

4,549

1,195

3,354

280.7

%

Comparable store sales growth

2.5

%

1.3

%

Systemwide sales (in millions)(2)

$

194.9

189.3

5.6

2.9

%

Points of distribution

3,427

3,420

7

0.2

%

Gross openings

95

102

(7)

(6.9)

%

Net openings

12

18

(6)

(33.3)

%

(1) Prior period amounts have been restated to reflect the adoption of new revenue recognition guidance. See "Adoption of New Accounting Standard" for further detail.

(2) Systemwide sales include sales at franchisee-operated restaurants, including joint ventures. We do not record sales by franchisees, licensees, or joint ventures as revenue and such sales are not included in our consolidated financial statements. See "Non-GAAP Measures and Statistical Data" for further detail.

Dunkin' International third quarter systemwide sales increased 2.9% from the prior year period driven by sales growth in the Middle East, offset by a sales decline in Asia. Sales in Asia were negatively impacted by unfavorable foreign exchange rates. On a constant currency basis, systemwide sales increased by approximately 5%.

Dunkin' International third quarter revenues of $6.3 million represented an increase of 27.3% from the prior year period. The increase in revenues was primarily a result of an increase in royalty income driven by systemwide sales growth, as well as an increase in franchise fees due primarily to recognition of deferred revenue upon the closure of restaurants.

Segment profit for Dunkin' International increased $3.4 million to $4.5 million in the third quarter primarily as a result of the increase in revenues, as well as a decrease in general and administrative expenses.

Amounts and percentages may not recalculate due to rounding

Three months ended

Increase (Decrease)

Baskin-Robbins U.S.

September 29,

 2018

September 30,

 2017(1)

$ / #

%

(Unaudited, $ in thousands except as otherwise noted)

Revenues:

Royalty income

$

8,626

8,501

125

1.5

%

Franchise fees

319

190

129

67.9

%

Rental income

773

798

(25)

(3.1)

%

Sales of ice cream and other products

906

771

135

17.5

%

Other revenues

3,057

3,062

(5)

(0.2)

%

Total revenues

$

13,681

13,322

359

2.7

%

Segment profit

$

10,183

10,035

148

1.5

%

Comparable store sales growth (decline)

1.8

%

(0.4)

%

Systemwide sales (in millions)(2)

$

180.6

177.0

3.6

2.0

%

Points of distribution

2,558

2,562

(4)

(0.2)

%

Gross openings

17

26

(9)

(34.6)

%

Net openings (closings)

(3)

11

(14)

(127.3)

%

(1) Prior period amounts have been restated to reflect the adoption of new revenue recognition guidance. See "Adoption of New Accounting Standard" for further detail.

(2) Systemwide sales include sales at franchisee-operated restaurants, including joint ventures. We do not record sales by franchisees, licensees, or joint ventures as revenue and such sales are not included in our consolidated financial statements. See "Non-GAAP Measures and Statistical Data" for further detail.

Baskin-Robbins U.S. third quarter revenues increased 2.7% from the prior year period to $13.7 million due primarily to increases in sales of ice cream and other products, franchise fees, and royalty income.

Segment profit for Baskin-Robbins U.S. increased to $10.2 million in the third quarter, an increase of 1.5%, primarily as a result of the increases in franchise fees and royalty income, offset by an increase in general and administrative expenses.

Amounts and percentages may not recalculate due to rounding

Three months ended

Increase (Decrease)

Baskin-Robbins International

September 29,

 2018

September 30,

 2017(1)

$ / #

%

(Unaudited, $ in thousands except as otherwise noted)

Revenues:

Royalty income

$

2,140

1,966

174

8.9

%

Franchise fees

203

326

(123)

(37.7)

%

Rental income

137

129

8

6.2

%

Sales of ice cream and other products

28,625

26,512

2,113

8.0

%

Other revenues

52

30

22

73.3

%

Total revenues

$

31,157

28,963

2,194

7.6

%

Segment profit

$

12,009

11,573

436

3.8

%

Comparable store sales growth (decline)

7.5

%

(4.3)

%

Systemwide sales (in millions)(2)

$

425.4

382.2

43.1

11.3

%

Points of distribution

5,466

5,382

84

1.6

%

Gross openings

82

95

(13)

(13.7)

%

Net openings

16

41

(25)

(61.0)

%

(1) Prior period amounts have been restated to reflect the adoption of new revenue recognition guidance. See "Adoption of New Accounting Standard" for further detail.

(2) Systemwide sales include sales at franchisee-operated restaurants, including joint ventures. We do not record sales by franchisees, licensees, or joint ventures as revenue and such sales are not included in our consolidated financial statements. See "Non-GAAP Measures and Statistical Data" for further detail.

Baskin-Robbins International systemwide sales increased 11.3% in the third quarter compared to the prior year period driven by sales growth in South Korea, the Middle East, and Japan, offset by a sales decline in Asia. Sales in South Korea were positively impacted by favorable foreign exchange rates, while all other regions were negatively impacted by unfavorable foreign exchange rates. On a constant currency basis, systemwide sales increased by approximately 12%.

Baskin-Robbins International third quarter revenues of $31.2 million represented an increase of 7.6% from the prior year period due primarily to an increase in sales of ice cream and other products. Systemwide sales and sales of ice cream products are not directly correlated within a given period due to certain licensees sourcing their own ice cream products, the lag between shipment of products to licensees and retail sales at franchised restaurants, and the overall timing of deliveries between fiscal quarters.

Third quarter segment profit increased 3.8% from the prior year period to $12.0 million primarily as a result of an increase in net income from our South Korea joint venture and a decrease in general and administrative expenses, offset by a decrease in net margin on ice cream driven primarily by an increase in commodity costs, as well as a decrease in net income from our Japan joint venture.

Three months ended

Increase (Decrease)

U.S. Advertising Funds

September 29,

 2018

September 30,

 2017(1)

$ / #

%

(Unaudited, $ in thousands)

Revenues:

Advertising fees and related income

$

118,208

113,862

4,346

3.8

%

Total revenues

$

118,208

113,862

4,346

3.8

%

Segment profit

$

%

(1) Prior period amounts have been restated to reflect the adoption of new revenue recognition guidance. See "Adoption of New Accounting Standard" for further detail.

U.S. Advertising Funds third quarter revenues of $118.2 million represented an increase of 3.8% compared to the prior year period driven primarily by Dunkin' U.S. systemwide sales growth. Expenses for the U.S. Advertising Funds were equivalent to revenues in each period, resulting in no segment profit.

COMPANY UPDATES

  • The Company today announced that the Board of Directors declared a cash dividend of $0.3475 per share, payable on December 5, 2018, to shareholders of record as of the close of business on November 26, 2018.
  • During the third quarter, the Company completed its repurchases under the two accelerated share repurchase agreements that it entered into in February 2018 for a total $650 million. At settlement, in August 2018, the Company received an additional 1.7 million shares. Under the agreements, the Company repurchased a total of approximately 10.2 million shares at a weighted average cost per share of $63.91. The Company's shares outstanding as of September 29, 2018 were 82,441,928.

FISCAL YEAR 2018 TARGETS

As described below, the Company is reiterating and updating certain of its 2018 performance targets.

  • The Company continues to expect approximately one percent comparable store sales growth for Dunkin' U.S. and low-single digit comparable sales growth for Baskin-Robbins U.S.
  • The Company continues to expect Dunkin' U.S. franchisees to add greater than 275 net new restaurants.
  • The Company now expects low-to-mid-single digit percent growth in other revenue (previously it expected high-single digit percent growth).
  • The Company continues to expect low-to-mid single digit percent revenue growth.
  • The Company continues to expect ice cream margin dollars to be flat compared to 2017 from a profit dollar standpoint.
  • The Company continues to expect a low-single digit percent reduction to general and administrative expense.
  • The Company continues to expect mid-single digit percent operating and adjusted operating income growth.
  • The Company continues to expect full-year weighted-average shares outstanding of approximately 85 million. It now expects to have an effective tax rate of 23 percent, which is inclusive of the impact of the excess tax benefit recognized in the third quarter. This guidance excludes any potential future impact from material excess tax benefits in the fourth quarter of 2018.
  • The Company now expects GAAP diluted earnings per share of $2.60 to $2.64 (previously it expected $2.48 to $2.56) and diluted adjusted earnings per share of $2.80 to $2.82 (previously it expected $2.68 to $2.72).
  • The Company continues to expect capital expenditures to be approximately $45 to $50 million.

About Dunkin' Brands Group, Inc.

With more than 20,700 points of distribution in more than 60 countries worldwide, Dunkin' Brands Group, Inc. (Nasdaq: DNKN) is one of the world's leading franchisors of quick service restaurants (QSR) serving hot and cold coffee and baked goods, as well as hard-serve ice cream. At the end of the third quarter 2018, Dunkin' Brands' 100 percent franchised business model included more than 12,700 Dunkin' restaurants and more than 8,000 Baskin-Robbins restaurants. Dunkin' Brands Group, Inc. is headquartered in Canton, Mass.

DUNKIN' BRANDS GROUP, INC. AND SUBSIDIARIES

Consolidated Statements of Operations

(In thousands, except per share data)

(Unaudited)

Three months ended

Nine months ended

September 29,

2018

September 30,

 2017(1)

September 29,

2018

September 30,

 2017(1)

Revenues:

Franchise fees and royalty income(2)

$

151,991

143,734

435,740

415,343

Advertising fees and related income

132,471

122,660

375,017

355,224

Rental income

27,547

27,713

79,425

79,543

Sales of ice cream and other products(2)

24,867

23,173

74,784

74,358

Other revenues

13,135

12,791

37,027

36,137

Total revenues

350,011

330,071

1,001,993

960,605

Operating costs and expenses:

Occupancy expenses—franchised restaurants

14,765

15,333

43,059

43,758

Cost of ice cream and other products

21,311

19,457

60,956

58,578

Advertising expenses

133,732

124,080

378,283

358,828

General and administrative expenses, net

63,997

60,580

183,122

182,023

Depreciation

4,937

4,941

15,095

15,096

Amortization of other intangible assets

5,230

5,341

15,912

16,001

Long-lived asset impairment charges

55

536

1,209

643

Total operating costs and expenses

244,027

230,268

697,636

674,927

Net income of equity method investments

5,787

5,466

11,665

12,612

Other operating income (loss), net

(179)

3

(749)

591

Operating income

111,592

105,272

315,273

298,881

Other income (expense), net:

Interest income

1,930

624

5,088

1,370

Interest expense

(31,932)

(24,436)

(96,947)

(74,192)

Other income (loss), net

(101)

155

(700)

370

Total other expense, net

(30,103)

(23,657)

(92,559)

(72,452)

Income before income taxes

81,489

81,615

222,714

226,429

Provision for income taxes

15,422

40,445

45,997

89,874

Net income

$

66,067

41,170

176,717

136,555

Earnings per share—basic

$

0.80

0.46

2.10

1.50

Earnings per share—diluted

0.79

0.45

2.07

1.48

(1) Prior period amounts have been restated to reflect the adoption of new revenue recognition guidance. See "Adoption of New Accounting Standard" for further detail.

(2) For the three months ended September 29, 2018 and September 30, 2017, $4.8 million and $4.4 million, respectively, and for the nine months ended September 29, 2018 and September 30, 2017, $12.2 million and $11.4 million, respectively, of sales of ice cream and other products have been allocated to franchise fees and royalty income as consideration for the use of the franchise license.

DUNKIN' BRANDS GROUP, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(In thousands)

(Unaudited)

September 29,

 2018

December 30,

 2017(1)

Assets

Current assets:

Cash and cash equivalents

$

428,179

1,018,317

Restricted cash

79,432

94,047

Accounts, notes, and other receivables, net

133,711

121,849

Other current assets

69,040

70,120

Total current assets

710,362

1,304,333

Property and equipment, net

205,860

181,542

Equity method investments

142,954

140,615

Goodwill and other intangible assets, net

2,228,327

2,245,465

Other assets

66,650

65,478

Total assets

$

3,354,153

3,937,433

Liabilities and Stockholders' Deficit

Current liabilities:

Current portion of long-term debt

$

31,650

31,500

Accounts payable

55,862

53,417

Deferred revenue

43,752

44,876

Other current liabilities

297,176

355,706

Total current liabilities

428,440

485,499

Long-term debt, net

3,017,281

3,035,857

Deferred revenue

354,472

361,458

Deferred income taxes, net

200,196

214,345

Other long-term liabilities

89,322

94,813

Total long-term liabilities

3,661,271

3,706,473

Total stockholders' deficit

(735,558)

(254,539)

Total liabilities and stockholders' deficit

$

3,354,153

3,937,433

(1) Prior period amounts have been restated to reflect the adoption of new revenue recognition guidance.

See "Adoption of New Accounting Standard" for further detail.

DUNKIN' BRANDS GROUP, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

Nine months ended

September 29,

 2018

September 30,

 2017(1)

Net cash provided by operating activities

$

126,529

126,180

Cash flows from investing activities:

Additions to property and equipment

(41,450)

(13,649)

Other, net

20

(101)

Net cash used in investing activities

(41,430)

(13,750)

Cash flows from financing activities:

Repayment of long-term debt

(23,688)

(18,750)

Payment of debt issuance and other debt-related costs

(312)

Dividends paid on common stock

(86,035)

(87,911)

Repurchases of common stock, including accelerated share repurchases

(650,368)

(127,186)

Exercise of stock options

71,657

33,267

Other, net

(1,101)

(214)

Net cash used in financing activities

(689,535)

(201,106)

Effect of exchange rates on cash, cash equivalents, and restricted cash

(350)

576

Decrease in cash, cash equivalents, and restricted cash

(604,786)

(88,100)

Cash, cash equivalents, and restricted cash, beginning of period

1,114,099

431,832

Cash, cash equivalents, and restricted cash, end of period

$

509,313

343,732

(1) Prior period amounts have been restated to reflect the adoption of new revenue recognition guidance. See "Adoption of New Accounting Standard" for further detail.

DUNKIN' BRANDS GROUP, INC. AND SUBSIDIARIES

Non-GAAP Reconciliations

(In thousands, except share and per share data)

(Unaudited)

Three months ended

Nine months ended

September 29,

2018

September 30,

 2017(1)

September 29,

2018

September 30,

 2017(1)

Operating income

$

111,592

105,272

315,273

298,881

Operating income margin

31.9

%

31.9

%

31.5

%

31.1

%

Adjustments:

Amortization of other intangible assets

$

5,230

5,341

15,912

16,001

Long-lived asset impairment charges

55

536

1,209

643

Adjusted operating income

$

116,877

111,149

332,394

315,525

Adjusted operating income margin

33.4

%

33.7

%

33.2

%

32.8

%

Net income

$

66,067

41,170

176,717

136,555

Adjustments:

Amortization of other intangible assets

5,230

5,341

15,912

16,001

Long-lived asset impairment charges

55

536

1,209

643

Tax impact of adjustments(2)

(1,480)

(2,351)

(4,794)

(6,658)

Adjusted net income

$

69,872

44,696

189,044

146,541

Adjusted net income

$

69,872

44,696

189,044

146,541

Weighted average number of common shares – diluted

84,107,840

91,433,076

85,366,264

92,386,611

Diluted adjusted earnings per share

$

0.83

0.49

2.21

1.59

(1) Prior period amounts have been restated to reflect the adoption of new revenue recognition guidance. See "Adoption of New Accounting Standard" for

further detail.

(2) Tax impact of adjustments calculated at effective tax rates of 28% for the three and nine months ended September 29, 2018 and 40% for the three and nine months ended September 30, 2017.

DUNKIN' BRANDS GROUP, INC. AND SUBSIDIARIES

Non-GAAP Reconciliations (continued)

(Unaudited)

Fiscal year ended

December 29, 2018

Low

High

(projected)

(projected)

Diluted earnings per share

$

2.60

2.64

Adjustments:

Amortization of other intangible assets

0.25

0.24

Long-lived asset impairment charges

0.03

0.01

Tax impact of adjustments(1)

(0.08)

(0.07)

Diluted adjusted earnings per share

$

2.80

2.82

(1) Tax impact of adjustments calculated at a 28% effective tax rate.

SOURCE Dunkin' Brands Group, Inc.



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