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Actionable news in DNKN: Dunkin' Brands Group, Inc.,

U.S. SECURITIES AND EXCHANGE COMMISSION

Page
Part I. – Financial Information
Item 1.Financial Statements3
Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations19
Item 3.Quantitative and Qualitative Disclosures About Market Risk32
Item 4.Controls and Procedures32
Part II. – Other Information
Item 1.Legal Proceedings33
Item 1A.Risk Factors33
Item 2.Unregistered Sales of Equity Securities and Use of Proceeds33
Item 3.Defaults Upon Senior Securities33
Item 4.Mine Safety Disclosures33
Item 5.Other Information33
Item 6.Exhibits35
Signatures36
September 30,
2017
December 31,
2016
Assets
Current assets:
Cash and cash equivalents$266,981
361,425
Restricted cash76,141
69,746
Accounts receivable, net of allowance for doubtful accounts of $4,616 and $4,778 as of September 30, 2017 and December 31, 2016, respectively47,136
44,512
Notes and other receivables, net of allowance for doubtful accounts of $500 and $339 as of September 30, 2017 and December 31, 2016, respectively30,274
40,672
Restricted assets of advertising funds57,873
40,338
Prepaid income taxes9,843
20,926
Prepaid expenses and other current assets33,605
28,739
Total current assets521,853
606,358
Property and equipment, net of accumulated depreciation of $135,284 and $124,675 as of September 30, 2017 and December 31, 2016, respectively170,269
176,662
Equity method investments128,633
114,738
Goodwill888,311
888,272
Other intangible assets, net of accumulated amortization of $245,569 and $230,364 as of September 30, 2017 and December 31, 2016, respectively1,362,586
1,378,720
Other assets67,674
62,632
Total assets$3,139,326
3,227,382
Liabilities and Stockholders’ Deficit
Current liabilities:
Current portion of long-term debt$25,000
25,000
Capital lease obligations584
589
Accounts payable12,416
12,682
Liabilities of advertising funds57,935
52,271
Deferred income37,595
35,393
Other current liabilities230,487
298,266
Total current liabilities364,017
424,201
Long-term debt, net2,388,091
2,401,998
Capital lease obligations7,209
7,550
Unfavorable operating leases acquired10,164
11,378
Deferred income10,729
12,154
Deferred income taxes, net459,524
461,810
Other long-term liabilities73,680
71,549
Total long-term liabilities2,949,397
2,966,439
Commitments and contingencies (note 9)

Stockholders’ equity (deficit):
Preferred stock, $0.001 par value; 25,000,000 shares authorized; no shares issued and outstanding

Common stock, $0.001 par value; 475,000,000 shares authorized; 90,290,628 shares issued and 90,263,851 shares outstanding as of September 30, 2017; 91,464,229 shares issued and 91,437,452 shares outstanding as of December 31, 201690
91
Additional paid-in capital746,052
807,492
Treasury stock, at cost; 26,777 shares as of September 30, 2017 and December 31, 2016(1,060)(1,060)
Accumulated deficit(900,217)(945,797)
Accumulated other comprehensive loss(18,953)(23,984)
Total stockholders’ deficit(174,088)(163,258)
Total liabilities and stockholders’ deficit$3,139,326
3,227,382
Three months endedNine months ended
September 30,
2017
September 24,
2016
September 30,
2017
September 24,
2016
Revenues:
Franchise fees and royalty income$151,809
138,639
426,944
399,617
Rental income27,713
26,880
79,543
75,874
Sales of ice cream and other products27,551
26,568
85,710
86,425
Sales at company-operated restaurants
1,611

11,924
Other revenues17,095
13,401
41,165
39,344
Total revenues224,168
207,099
633,362
613,184
Operating costs and expenses:
Occupancy expenses—franchised restaurants15,333
15,881
43,758
42,691
Cost of ice cream and other products19,457
18,384
58,578
58,445
Company-operated restaurant expenses
1,682

13,472
General and administrative expenses, net61,996
59,374
185,613
184,028
Depreciation4,941
5,050
15,096
15,361
Amortization of other intangible assets5,341
5,397
16,001
16,726
Long-lived asset impairment charges536
7
643
104
Total operating costs and expenses107,604
105,775
319,689
330,827
Net income of equity method investments5,466
5,467
12,612
12,148
Other operating income, net3
2,569
591
6,329
Operating income122,033
109,360
326,876
300,834
Other income (expense), net:
Interest income624
161
1,370
434
Interest expense(24,436)(24,603)(74,192)(74,456)
Other income (losses), net155
(124)370
(596)
Total other expense, net(23,657)(24,566)(72,452)(74,618)
Income before income taxes98,376
84,794
254,424
226,216
Provision for income taxes46,130
32,082
99,007
86,760
Net income$52,246
52,712
155,417
139,456
Earnings per share:
Common—basic$0.58
0.58
1.71
1.52
Common—diluted0.57
0.57
1.68
1.51
Cash dividends declared per common share0.32
0.30
0.97
0.90
Three months endedNine months ended
September 30,
2017
September 24,
2016
September 30,
2017
September 24,
2016
Net income$52,246
52,712
155,417
139,456
Other comprehensive income (loss), net:
Effect of foreign currency translation, net of deferred tax expense (benefit) of $6 and $(59) for the three months ended September 30, 2017 and September 24, 2016, respectively, and $579 and $(488) for the nine months ended September 30, 2017 and September 24, 2016, respectively(662)6,161
5,309
8,730
Effect of interest rate swaps, net of deferred tax benefit of $216 for each of the three months ended September 30, 2017 and September 24, 2016 and $650 for each of the nine months ended September 30, 2017 and September 24, 2016(319)(319)(955)(955)
Other, net24
(27)677
(230)
Total other comprehensive income (loss), net(957)5,815
5,031
7,545
Comprehensive income$51,289
58,527
160,448
147,001
Nine months ended
September 30,
2017
September 24,
2016
Cash flows from operating activities:
Net income$155,417
139,456
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization31,097
32,087
Amortization of debt issuance costs4,843
4,700
Deferred income taxes(1,516)(5,595)
Provision for bad debt599
681
Share-based compensation expense10,896
12,548
Net income of equity method investments(12,612)(12,148)
Dividends received from equity method investments4,711
5,247
Gain on sale of real estate and company-operated restaurants(29)(6,322)
Other, net(2,299)(1,554)
Change in operating assets and liabilities:
Accounts, notes, and other receivables, net7,712
43,482
Prepaid income taxes, net10,884
6,569
Prepaid expenses and other current assets(4,600)(3,552)
Accounts payable(1,501)(1,635)
Other current liabilities(68,274)(91,651)
Liabilities of advertising funds, net(11,232)896
Deferred income722
3,800
Other, net(3,289)4,250
Net cash provided by operating activities121,529
131,259
Cash flows from investing activities:
Additions to property and equipment(8,998)(10,358)
Proceeds from sale of real estate and company-operated restaurants
15,479
Other, net(101)(1,014)
Net cash provided by (used in) investing activities(9,099)4,107
Cash flows from financing activities:
Repayment of long-term debt(18,750)(18,750)
Payment of debt issuance and other debt-related costs(312)
Dividends paid on common stock(87,911)(82,326)
Repurchases of common stock, including accelerated share repurchases(127,186)
(30,000)
Exercise of stock options33,267
4,937
Other, net(214)(690)
Net cash used in financing activities(201,106)(126,829)
Effect of exchange rates on cash, cash equivalents, and restricted cash576
20
Increase (decrease) in cash, cash equivalents, and restricted cash(88,100)8,557
Cash, cash equivalents, and restricted cash, beginning of period431,832
333,115
Cash, cash equivalents, and restricted cash, end of period$343,732
341,672
Supplemental cash flow information:
Cash paid for income taxes$89,882
86,460
Cash paid for interest70,038
70,749
Noncash investing activities:
Property and equipment included in accounts payable and other current liabilities1,919
1,121
Purchase of leaseholds in exchange for capital lease obligations330
389
September 30,
2017
December 31,
2016
Cash and cash equivalents$266,981
361,425
Restricted cash76,141
69,746
Restricted cash, included in Other assets610
661
Total cash, cash equivalents, and restricted cash$343,732
431,832
September 30, 2017December 31, 2016
Significant other observable inputs (Level 2)TotalSignificant other observable inputs (Level 2)Total
Assets:
Company-owned life insurance $10,389
10,389
9,271
9,271
Total assets$10,389
10,389
9,271
9,271
Liabilities:
Deferred compensation liabilities$12,851
12,851
11,126
11,126
Total liabilities$12,851
12,851
11,126
11,126
On a prospective basis, as required, the Company recorded excess tax benefits of $524 thousand and $7.3 million to the provision for income taxes in the consolidated statements of operations for the three and nine months ended September 30, 2017, respectively, instead of additional paid-in capital in the consolidated balance sheets. As a result, net income increased $524 thousand and $7.3 million, for the three and nine months ended September 30, 2017, respectively, and basic and diluted earnings per share increased $0.01 and $0.08 for the three and nine months endedSeptember 30, 2017, respectively.
Excess tax benefits are presented as operating cash inflows instead of financing cash inflows in the consolidated statements of cash flows, which the Company elected to apply on a retrospective basis. As a result, the Company classified $7.3 million and $2.0 million for the nine months ended September 30, 2017 and September 24, 2016, respectively, of excess tax benefits as operating cash inflows included within the change in prepaid income taxes, net in the consolidated statements of cash flows. The retrospective reclassification resulted in increases in cash provided by operating activities and cash used in financing activities of $2.0 million for the nine months ended September 24, 2016.
The Company prospectively excluded the excess tax benefits from the assumed proceeds available to repurchase shares in the computation of diluted earnings per share under the treasury stock method, which did not have a material impact on diluted earnings per share for the three and nine months ended September 30, 2017.
Three months endedNine months ended
September 30,
2017
September 24,
2016
September 30,
2017
September 24,
2016
Royalty income$133,740
127,986
387,634
368,190
Initial franchise fees and renewal income18,069
10,653
39,310
31,427
Total franchise fees and royalty income$151,809
138,639
426,944
399,617
Three months endedNine months ended
September 30,
2017
September 24,
2016
September 30,
2017
September 24,
2016
Systemwide points of distribution:
Franchised points of distribution in operation—beginning of period20,242
19,640
20,080
19,308
Franchised points of distribution—opened326
310
928
988
Franchised points of distribution—closed(189)(195)(629)(563)
Net transfers from company-operated points of distribution
23

45
Franchised points of distribution in operation—end of period20,379
19,778
20,379
19,778
Company-operated points of distribution—end of period
6

6
Total systemwide points of distribution—end of period20,379
19,784
20,379
19,784
September 30,
2017
December 31,
2016
Gift card/certificate liability$142,020
207,628
Gift card breakage liability2,668
13,301
Accrued payroll and benefits29,120
25,071
Accrued legal liabilities (see note 9(c))6,342
5,555
Accrued interest10,621
10,702
Accrued professional costs3,012
2,170
Franchisee profit-sharing liability8,497
11,083
Other28,207
22,756
Total other current liabilities$230,487
298,266
Revenues
Three months endedNine months ended
September 30,
2017
September 24,
2016
September 30,
2017
September 24,
2016
Dunkin’ Donuts U.S.$165,106
152,425
464,148
444,898
Dunkin’ Donuts International5,157
4,449
14,947
16,917
Baskin-Robbins U.S.13,751
13,781
38,645
38,080
Baskin-Robbins International28,810
27,904
88,876
89,578
Total reportable segment revenues212,824
198,559
606,616
589,473
Other11,344
8,540
26,746
23,711
Total revenues$224,168
207,099
633,362
613,184
Segment profit
Three months endedNine months ended
September 30,
2017
September 24,
2016
September 30,
2017
September 24,
2016
Dunkin’ Donuts U.S.$129,719
119,434
360,241
335,963
Dunkin’ Donuts International1,439
705
4,782
6,438
Baskin-Robbins U.S.10,466
11,085
28,773
29,123
Baskin-Robbins International11,420
11,154
31,900
30,617
Total reportable segments153,044
142,378
425,696
402,141
Corporate(25,134)(27,614)(82,176)(84,477)
Interest expense, net(23,812)(24,442)(72,822)(74,022)
Amortization of other intangible assets(5,341)(5,397)(16,001)(16,726)
Long-lived asset impairment charges(536)(7)(643)(104)
Other income (losses), net155
(124)370
(596)
Income before income taxes$98,376
84,794
254,424
226,216
Net income (loss) of equity method investments
Three months endedNine months ended
September 30,
2017
September 24,
2016
September 30,
2017
September 24,
2016
Dunkin’ Donuts International$9
351
(68)829
Baskin-Robbins International4,492
4,266
9,468
8,644
Total reportable segments4,501
4,617
9,400
9,473
Other965
850
3,212
2,675
Total net income of equity method investments$5,466
5,467
12,612
12,148
Total stockholders’ deficit
Balance as of December 31, 2016$(163,258)
Net income 155,417
Other comprehensive income5,031
Dividends paid on common stock(87,911)
Exercise of stock options33,267
Repurchases of common stock(127,186)
Share-based compensation expense10,896
Other, net(344)
Balance as of September 30, 2017$(174,088)
Effect of foreign currency translationUnrealized gains on interest rate swapsOther Accumulated other comprehensive gain (loss)
Balance as of December 31, 2016$(23,019)1,144
(2,109)(23,984)
Other comprehensive income (loss), net5,309
(955)677
5,031
Balance as of September 30, 2017$(17,710)189
(1,432)(18,953)
Three months endedNine months ended
September 30,
2017
September 24,
2016
September 30,
2017
September 24,
2016
Net income—basic and diluted$52,246
52,712
155,417
139,456
Weighted average number of common shares:
Common—basic90,290,361
91,621,553
91,051,458
91,603,653
Common—diluted91,433,076
92,565,695
92,386,611
92,545,292
Earnings per common share:
Common—basic$0.58
0.58
1.71
1.52
Common—diluted0.57
0.57
1.68
1.51
Three months endedNine months ended
September 30,
2017
September 24,
2016
September 30,
2017
September 24,
2016
B-R 31 Ice Cream Company., Ltd.$588
686
1,464
1,577
BR-Korea Co., Ltd.1,122
1,192
3,174
3,053
$1,710
1,878
4,638
4,630
Amounts and percentages may not recalculate due to roundingThree months endedNine months ended
September 30,
2017
September 24,
2016
September 30,
2017
September 24,
2016
Financial data (in thousands):
Total revenues$224,168
207,099
633,362
613,184
Operating income122,033
109,360
326,876
300,834
Adjusted operating income127,910
114,764
343,520
317,300
Net income52,246
52,712
155,417
139,456
Adjusted net income55,772
55,955
165,403
149,336
Systemwide sales (in millions):
Dunkin’ Donuts U.S.$2,166.3
2,075.3
6,298.4
5,997.5
Dunkin’ Donuts International189.3
177.5
533.6
519.9
Baskin-Robbins U.S.177.0
178.2
493.6
491.1
Baskin-Robbins International382.2
390.0
1,021.8
1,006.0
Total systemwide sales$2,914.8
2,821.0
8,347.4
8,014.5
Systemwide sales growth3.3 %6.3 %4.2 %4.8 %
Comparable store sales growth (decline):
Dunkin’ Donuts U.S.0.6 %2.0 %0.5 %1.4 %
Dunkin’ Donuts International1.3 %(1.4)%(0.1)%(2.2)%
Baskin-Robbins U.S.(0.4)%(0.9)%(1.1)%1.1 %
Baskin-Robbins International(4.3)%(2.9)%(1.0)%(5.5)%
Dunkin’ Donuts U.S. systemwide sales growth of 4.4% and 5.0% for the three and nine months ended September 30, 2017, respectively, was primarily a result of 386 net new restaurants opened since September 24, 2016 and comparable store sales growth of 0.6% and 0.5%, respectively. The increases in comparable store sales were driven by increased average ticket, offset by a decline in traffic. Growth was primarily driven by sales of breakfast sandwiches. Beverage sales increased slightly for the three months ended September 30, 2017, led by hot coffee and espresso, offset by a decline in frozen beverages, while beverage sales decreased slightly for the nine months ended September 30, 2017 due primarily to a decline in hot coffee, offset by an increase in iced coffee, driven by Cold Brew sales.
Baskin-Robbins U.S. systemwide sales decline of 0.7% for the three months ended September 30, 2017 was primarily a result of comparable store sales declines of 0.4% for the three months endedSeptember 30, 2017 driven by decreases in sales of sundaes, desserts, and beverages, offset by an increase in take-home products. Systemwide sales growth of 0.5% for the nine months endedSeptember 30, 2017 was driven by the addition of 29 net new restaurants opened since September 24, 2016, offset by comparable sales decline of 1.1%. For the nine months ended September 30, 2017, sales of cups and cones, desserts, and beverages decreased, offset by increased sales in take-home products. For the three and nine months ended September 30, 2017, traffic declined and average ticket increased.
Baskin-Robbins International systemwide sales decline of 2.0% for the three months ended September 30, 2017 was driven by sales declines in South Korea and Japan, offset by growth in the Middle East and Southeast Asia. Systemwide sales growth of 1.6% for the nine months ended September 30, 2017 was driven by growth in South Korea, Southeast Asia, India, and Canada, offset by declines in Japan, China, Europe, and the Middle East. Sales in Japan were negatively impacted by foreign exchange rates for both the three- and nine-month periods, while sales in South Korea were positively impacted by foreign exchange rates for the nine-month period. On a constant currency basis, systemwide sales increased by approximately 1% and 2% for the three and nine months ended September 30, 2017, respectively. Baskin-Robbins International comparable store sales declines of 4.3% and 1.0% for the three and nine months ended September 30, 2017 was driven primarily by declines in the Middle East. Also contributing to the decline in comparable store sales for the three months ended September 30, 2017 was a decline in South Korea.
September 30,
2017
September 24,
2016
Points of distribution, at period end:
Dunkin’ Donuts U.S.9,015
8,629
Dunkin’ Donuts International3,420
3,379
Baskin-Robbins U.S.2,562
2,533
Baskin-Robbins International5,382
5,243
Consolidated global points of distribution20,379
19,784
Three months endedNine months ended
September 30,
2017
September 24,
2016
September 30,
2017
September 24,
2016
Net openings (closings) during the period:
Dunkin’ Donuts U.S.67
56
187
198
Dunkin’ Donuts International18
11
(10)60
Baskin-Robbins U.S.11
3
24
4
Baskin-Robbins International41
45
98
165
Consolidated global net openings137
115
299
427
Three months endedNine months ended
September 30,
2017
September 24,
2016
September 30,
2017
September 24,
2016
(In thousands)
Operating income$122,033
109,360
326,876
300,834
Adjustments:
Amortization of other intangible assets5,341
5,397
16,001
16,726
Long-lived asset impairment charges536
7
643
104
Transaction-related costs(a)


64
Bertico and related litigation


(428)
Adjusted operating income$127,910
114,764
343,520

317,300
Net income$52,246
52,712
155,417
139,456
Adjustments:
Amortization of other intangible assets5,341
5,397
16,001
16,726
Long-lived asset impairment charges536
7
643
104
Transaction-related costs(a)


64
Bertico and related litigation


(428)
Tax impact of adjustments(b)(2,351)(2,161)(6,658)(6,586)
Adjusted net income$55,772
55,955
165,403
149,336
(a)Represents non-capitalizable costs incurred as a result of the securitized financing facility.
Three months endedNine months ended
September 30,
2017
September 24,
2016
September 30,
2017
September 24,
2016
Earnings per share:
Common—basic$0.58
0.58
1.71
1.52
Common—diluted0.57
0.57
1.68
1.51
Diluted adjusted earnings per share0.61
0.60
1.79
1.61
Three months endedNine months ended
September 30,
2017
September 24,
2016
September 30,
2017
September 24,
2016
(In thousands, except share and per share data)
Adjusted net income$55,772
55,955
165,403
149,336
Weighted average number of common shares—diluted91,433,076
92,565,695
92,386,611
92,545,292
Diluted adjusted earnings per share$0.61
0.60
1.79
1.61
Three months endedNine months ended
September 30,
2017
September 24,
2016
Increase (Decrease)September 30,
2017
September 24,
2016
Increase (Decrease)
$%$%
(In thousands, except percentages)
Franchise fees and royalty income$151,809
138,639
13,170
9.5 %$426,944
399,617
27,327
6.8 %
Rental income27,713
26,880
833
3.1 %79,543
75,874
3,669
4.8 %
Sales of ice cream and other products27,551
26,568
983
3.7 %85,710
86,425
(715)(0.8)%
Sales at company-operated restaurants
1,611
(1,611)(100.0)%
11,924
(11,924)(100.0)%
Other revenues17,095
13,401
3,694
27.6 %41,165
39,344
1,821
4.6 %
Total revenues$224,168
207,099
17,069
8.2 %$633,362
613,184
20,178
3.3 %
Three months endedNine months ended
September 30,
2017
September 24,
2016
Increase (Decrease)September 30,
2017
September 24,
2016
Increase (Decrease)
$%$%
(In thousands, except percentages)
Occupancy expenses—franchised restaurants$15,333
15,881
(548)(3.5)%$43,758
42,691
1,067
2.5 %
Cost of ice cream and other products19,457
18,384
1,073
5.8 %58,578
58,445
133
0.2 %
Company-operated restaurant expenses
1,682
(1,682)(100.0)%
13,472
(13,472)(100.0)%
General and administrative expenses, net61,996
59,374
2,622
4.4 %185,613
184,028
1,585
0.9 %
Depreciation and amortization10,282
10,447
(165)(1.6)%31,097
32,087
(990)(3.1)%
Long-lived asset impairment charges536
7
529
7,557.1 %643
104
539
518.3 %
Total operating costs and expenses$107,604
105,775
1,829
1.7 %$319,689
330,827
(11,138)(3.4)%
Net income of equity method investments5,466
5,467
(1)(0.0 )%12,612
12,148
464
3.8 %
Other operating income, net 3
2,569
(2,566)(99.9)%591
6,329
(5,738)(90.7)%
Operating income$122,033
109,360
12,673
11.6 %$326,876
300,834
26,042
8.7 %
Three months endedNine months ended
September 30,
2017
September 24,
2016
Increase (Decrease)September 30,
2017
September 24,
2016
Increase (Decrease)
$%$%
(In thousands, except percentages)
Interest expense, net$23,812
24,442
(630)(2.6)%$72,822
74,022
(1,200)(1.6)%
Other losses (income), net(155)124
(279)(225.0)%(370)596
(966)(162.1)%
Total other expense$23,657
24,566
(909)(3.7)%$72,452
74,618
(2,166)(2.9)%
Three months endedNine months ended
September 30,
2017
September 24,
2016
September 30,
2017
September 24,
2016
(In thousands, except percentages)
Income before income taxes$98,376
84,794
254,424
226,216
Provision for income taxes46,130
32,082
99,007
86,760
Effective tax rate46.9%37.8%38.9%38.4%
Three months endedNine months ended
September 30,
2017
September 24,
2016
Increase (Decrease)September 30,
2017
September 24,
2016
Increase (Decrease)
$%$%
(In thousands, except percentages)
Royalty income$118,831
113,281
5,550
4.9 %$345,103
326,835
18,268
5.6 %
Franchise fees16,635
9,852
6,783
68.8 %35,943
26,257
9,686
36.9 %
Rental income26,786
25,972
814
3.1 %76,842
73,285
3,557
4.9 %
Sales at company-operated restaurants
1,611
(1,611)(100.0)%
11,924
(11,924)(100.0)%
Other revenues2,854
1,709
1,145
67.0 %6,260
6,597
(337)(5.1)%
Total revenues$165,106
152,425
12,681
8.3 %$464,148
444,898
19,250
4.3 %
Segment profit$129,719
119,434
10,285
8.6 %$360,241
335,963
24,278
7.2 %
Three months endedNine months ended
September 30,
2017
September 24,
2016
Increase (Decrease)September 30,
2017
September 24,
2016
Increase (Decrease)
$%$%
(In thousands, except percentages)
Royalty income$4,442
4,125
317
7.7%$13,011
12,583
428
3.4 %
Franchise fees704
323
381
118.0%1,958
3,856
(1,898)(49.2)%
Other revenues11
1
10
1,000.0%(22)478
(500)(104.6)%
Total revenues$5,157
4,449
708
15.9%$14,947
16,917
(1,970)(11.6)%
Segment profit$1,439
705
734
104.1%$4,782
6,438
(1,656)(25.7)%
Three months endedNine months ended
September 30,
2017
September 24,
2016
Increase (Decrease)September 30,
2017
September 24,
2016
Increase (Decrease)
$%$%
(In thousands, except percentages)
Royalty income$8,501
8,499
2
0.0 %$24,265
23,546
719
3.1 %
Franchise fees557
273
284
104.0 %885
790
95
12.0 %
Rental income798
787
11
1.4 %2,346
2,221
125
5.6 %
Sales of ice cream and other products771
805
(34)(4.2)%2,179
2,037
142
7.0 %
Other revenues3,124
3,417
(293)(8.6)%8,970
9,486
(516)(5.4)%
Total revenues$13,751
13,781
(30)(0.2)%$38,645
38,080
565
1.5 %
Segment profit$10,466
11,085
(619)(5.6)%$28,773
29,123
(350)(1.2)%
Three months endedNine months ended
September 30,
2017
September 24,
2016
Increase (Decrease)September 30,
2017
September 24,
2016
Increase (Decrease)
$%$%
(In thousands, except percentages)
Royalty income$1,966
2,081
(115)(5.5)%$5,255
5,226
29
0.6 %
Franchise fees173
205
(32)(15.6)%524
524

%
Rental income129
121
8
6.6 %355
340
15
4.4 %
Sales of ice cream and other products26,512
25,340
1,172
4.6 %82,602
83,119
(517)(0.6)%
Other revenues30
157
(127)(80.9)%140
369
(229)(62.1)%
Total revenues$28,810
27,904
906
3.2 %$88,876
89,578
(702)(0.8)%
Segment profit$11,420
11,154
266
2.4 %$31,900
30,617
1,283
4.2 %
Nine months ended
September 30,
2017
September 24,
2016
Net cash provided by operating activities$121,529
131,259
Plus: Decrease in cash held for advertising funds and gift card/certificate programs69,224
37,511
Plus (less): Net cash provided by (used in) investing activities(9,099)4,107
Adjusted operating and investing cash flow$181,654
172,877
September 30, 2017
Principal outstanding under Class A-2 Notes$2,437,500
Total capital lease obligations7,793
Less: cash and cash equivalents(266,981)
Less: restricted cash, current(76,141)
Plus: cash held for gift card/certificate programs106,768
Net Debt$2,208,939
Twelve months ended
September 30, 2017
Net income$211,537
Interest expense100,588
Income tax expense129,920
Depreciation and amortization41,547
Impairment charges688
EBITDA484,280
Adjustments:
Share-based compensation expense15,529
Other(a)2,266
Total adjustments17,795
Adjusted EBITDA$502,075
Issuer Purchases of Equity Securities
PeriodTotal Number of Shares PurchasedAverage Price Paid Per ShareTotal Number of Shares Purchased as Part of Publicly Announced Plans or ProgramsApproximate Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs(1)
07/02/17 - 07/29/17260,444
$52.87
260,444
$136,231,545
07/30/17 - 09/02/17253,436
52.93
253,436
122,817,161
09/03/17 - 09/30/17


122,817,161
Total513,880
$52.90
513,880
(1) On October 25, 2017, our board of directors approved a share repurchase program of up to $650.0 million of outstanding shares of our common stock. Under the program, purchases may be made in the open market or in privately negotiated transactions from time to time subject to market conditions. The authorization is valid for a period of two years and replaces our $250.0 million share repurchase program that was approved by our board of directors on May 10, 2017 and which was set to expire two years after such approval.

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