EX-99.2 3 dnkn-ex992_20171230xpr.htm SUPPLEMENTAL UNAUDITED INFORMATION - ADOPTION OF NEW ACCOUNTING GUIDANCE Exhibit

Exhibit 99.2
Dunkin’ Brands Group, Inc.
Supplemental Information (Unaudited)
Adoption of New Revenue Recognition Guidance

SUPPLEMENTAL INFORMATION
The purpose of this exhibit is to provide additional information related to Dunkin’ Brands Group, Inc. and subsidiaries’ (“the Company”) adoption of new revenue recognition guidance and the impact to the Company’s historical financial results. This exhibit should be read in conjunction with Exhibit 99.1.

Revenue from Contracts with Customers
In May 2014, the Financial Accounting Standards Board (“FASB”) issued new guidance for revenue recognition related to contracts with customers, except for contracts within the scope of other standards, which supersedes nearly all existing revenue recognition guidance. The new guidance provides a single framework in which revenue is required to be recognized to depict the transfer of goods or services to customers in amounts that reflect the consideration to which a company expects to be entitled in exchange for those goods or services.
The new guidance is effective for the Company in fiscal year 2018. The Company will adopt this new guidance in fiscal year 2018 using the full retrospective transition method, which will result in restating each prior reporting period presented, fiscal years 2017 and 2016, in the year of adoption. Additionally, a cumulative effect adjustment will be recorded to the opening balance of accumulated deficit as of the first day of fiscal year 2016, the earliest period presented, which we expect to be $163.2 million.
The expected impact of the new guidance is summarized below. In addition to these expected impacts to our financial results, the Company continues to evaluate the impact the adoption of this new guidance will have on financial statement disclosures, in addition to evaluating business processes and internal controls related to revenue recognition to assist in the ongoing application of the new guidance.

Franchise Fees
The adoption of the new guidance will change the timing of recognition of initial franchise fees, including master license and territory fees for our international business, and renewal and transfer fees. Currently, these fees are generally recognized upfront upon either opening of the respective restaurant, when a renewal agreement becomes effective, or upon transfer of a franchise agreement. The new guidance will generally require these fees to be recognized over the term of the related franchise license for the respective restaurant, which will result in a material impact to revenue recognized for initial franchise fees and renewal fees. Additionally, transfer fees have historically been included within other revenues, but will be included within franchise fees and royalty income in the consolidated statements of operations under the new guidance. The new guidance will not materially impact the recognition of royalty income.

Advertising
The adoption of the new guidance will change the reporting of advertising fund contributions from franchisees and the related advertising fund expenditures, which are not currently included in the consolidated statements of operations. The new guidance requires these advertising fund contributions and expenditures to be reported on a gross basis in the consolidated statements of operations, which will have a material impact to our total revenues and expenses. However, we expect such advertising fund contributions and expenditures will be largely offsetting and therefore do not expect a significant impact on our reported net income. The assets and liabilities held by the advertising funds, which have historically been reported as restricted assets and liabilities of advertising funds, respectively, will be included within the respective balance sheet caption to which the assets and liabilities relate. Additionally, advertising costs that have been incurred by the Company outside of the advertising funds have historically been included within general and administrative expenses, net, but will be included within advertising expenses in the consolidated statements of operations.
Historically, breakage from Dunkin’ Donuts and Baskin-Robbins gift cards has been recorded as a reduction to general and administrative expenses, net, to offset the related gift card program costs. In accordance with the new guidance, breakage income will be reported on a gross basis in the consolidated statements of operations within advertising fees and related income, and the related gift card program costs will be included in advertising expenses.




Ice Cream Royalty Allocation
The adoption of the new guidance will require a portion of sales of ice cream products to be allocated to royalty income as consideration for the use of the franchise license. As such, a portion of sales of ice cream and other products will be reclassified to franchise fees and royalty income in the consolidated statements of operations under the new guidance. This allocation will have no impact on the timing of recognition of the related sales of ice cream products or royalty income.

Other Revenue Transactions
The adoption of the new guidance will require certain fees generated by licensing of our brand names and other intellectual property to be recognized over the term of the related agreement, including a one-time upfront license fee recognized in connection with the Dunkin’ K-Cup® pod licensing agreement in fiscal year 2015. Additionally, gains associated with the refranchise, sale, or transfer of restaurants that were not company-operated to new or existing franchisees will be recognized over the term of the related agreement under the new guidance, instead of upon closing of the sale transaction or transfer.

Impacts to Prior Period Information
As noted, the Company will adopt this new guidance in fiscal year 2018 using the full retrospective transition method, which will result in restating fiscal years 2016 and 2017 in the year of adoption. Upon adoption, the new guidance for revenue recognition is expected to impact the Company's reported results as follows:






DUNKIN’ BRANDS GROUP, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
 
 
Fiscal year ended December 30, 2017
 
 
 
 
Adjustments for new revenue recognition guidance
 
 
 
 
As reported
 
Franchise fees
 
Advertising
 
Ice cream royalty allocation
 
Other revenue transactions
 
Restated
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues:
 
 
 
 
 
 
 
 
 
 
 
 
Franchise fees and royalty income(a)
 
$
592,689

 
(51,754
)
 

 
14,271

 

 
555,206

Advertising fees and related income
 
—    

 

 
470,984

 

 

 
470,984

Rental income
 
104,643

 

 

 

 

 
104,643

Sales of ice cream and other products
 
110,659

 

 

 
(14,271
)
 

 
96,388

Other revenues
 
52,510

 
(5,838
)
 

 

 
1,658

 
48,330

Total revenues
 
860,501

 
(57,592
)
 
470,984

 

 
1,658

 
1,275,551

Operating costs and expenses:
 
 
 
 
 
 
 
 
 
 
 
 
Occupancy expenses—franchised restaurants
 
60,301

 

 

 

 

 
60,301

Cost of ice cream and other products
 
77,012

 

 

 

 

 
77,012

Advertising expenses
 
—    

 

 
476,157

 

 

 
476,157

General and administrative expenses, net
 
248,975

 

 
(5,147
)
 

 

 
243,828

Depreciation
 
20,084

 

 

 

 

 
20,084

Amortization of other intangible assets
 
21,335

 

 

 

 

 
21,335

Long-lived asset impairment charges
 
1,617

 

 

 

 

 
1,617

Total operating costs and expenses
 
429,324

 

 
471,010

 

 

 
900,334

Net income of equity method investments
 
15,198

 

 

 

 

 
15,198

Other operating income, net
 
627

 

 

 

 

 
627

Operating income
 
447,002

 
(57,592
)
 
(26
)
 

 
1,658

 
391,042

Other income (expense), net:
 
 
 
 
 
 
 
 
 
 
 
 
Interest income
 
3,313

 

 

 

 

 
3,313

Interest expense
 
(104,423
)
 

 

 

 

 
(104,423
)
Loss on debt extinguishment and refinancing transactions
 
(6,996
)
 

 

 

 

 
(6,996
)
Other gains, net
 
391

 

 

 

 

 
391

Total other expense, net
 
(107,715
)
 

 

 

 

 
(107,715
)
Income before income taxes(b)
 
339,287

 
(57,592
)
 
(26
)
 

 
1,658

 
283,327

Provision (benefit) for income taxes
 
(11,622
)
 
18,656

 

 

 
5,084

 
12,118

Net income
 
$
350,909

 
(76,248
)
 
(26
)
 

 
(3,426
)
 
271,209

 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings per share—basic(c)
 
$
3.86

 
(0.84
)
 

 

 
(0.04
)
 
2.99

Earnings per share—diluted(c)
 
3.80

 
(0.83
)
 

 

 
(0.04
)
 
2.94

(a) "Restated" amounts include royalty income of $532.5 million and initial, renewal, and other franchise fees of $22.7 million.
(b) Adjustments for "Franchise fees" and "Other revenue transactions" include tax expense of $42.2 million and $4.3 million, respectively, related to the enactment of the Tax Cuts and Jobs Act, consisting of the re-measurement of the related deferred tax balances using the lower enacted corporate tax rate.
(c) Amounts may not recalculate due to rounding.





DUNKIN’ BRANDS GROUP, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
 
 
Fiscal year ended December 31, 2016
 
 
 
 
Adjustments for new revenue recognition guidance
 
 
 
 
As reported
 
Franchise fees
 
Advertising
 
Ice cream royalty allocation
 
Other revenue transactions
 
Restated
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues:
 
 
 
 
 
 
 
 
 
 
 
 
Franchise fees and royalty income(a)
 
$
549,571

 
(27,490
)
 

 
14,315

 

 
536,396

Advertising fees and related income
 
—    

 
—    

 
453,553

 

 

 
453,553

Rental income
 
101,020

 
—    

 

 

 

 
101,020

Sales of ice cream and other products
 
114,857

 
—    

 

 
(14,315
)
 

 
100,542

Sales at company-operated restaurants
 
11,975

 
—    

 

 

 

 
11,975

Other revenues
 
51,466

 
(5,072
)
 

 

 
(1,525
)
 
44,869

Total revenues
 
828,889

 
(32,562
)
 
453,553

 

 
(1,525
)
 
1,248,355

Operating costs and expenses:
 
 
 
 
 
 
 
 
 
 
 
 
Occupancy expenses—franchised restaurants
 
57,409

 

 

 

 

 
57,409

Cost of ice cream and other products
 
77,608

 

 

 

 

 
77,608

Company-operated restaurant expenses
 
13,591

 

 

 

 

 
13,591

Advertising expenses
 
—    

 

 
458,568

 

 

 
458,568

General and administrative expenses, net
 
246,814

 

 
(4,990
)
 

 

 
241,824

Depreciation
 
20,458

 

 

 

 

 
20,458

Amortization of other intangible assets
 
22,079

 

 

 

 

 
22,079

Long-lived asset impairment charges
 
149

 

 

 

 

 
149

Total operating costs and expenses
 
438,108

 

 
453,578

 

 

 
891,686

Net income of equity method investments
 
14,552

 

 

 

 

 
14,552

Other operating income, net
 
9,381

 

 

 

 

 
9,381

Operating income
 
414,714

 
(32,562
)
 
(25
)
 

 
(1,525
)
 
380,602

Other income (expense), net:
 
 
 
 
 
 
 
 
 
 
 
 
Interest income
 
582

 

 

 

 

 
582

Interest expense
 
(100,852
)
 

 

 

 

 
(100,852
)
Other losses, net
 
(1,195
)
 

 

 

 

 
(1,195
)
Total other expense, net
 
(101,465
)
 

 

 

 

 
(101,465
)
Income before income taxes
 
313,249

 
(32,562
)
 
(25
)
 

 
(1,525
)
 
279,137

Provision (benefit) for income taxes
 
117,673

 
(13,205
)
 

 

 
(620
)
 
103,848

Net income
 
$
195,576

 
(19,357
)
 
(25
)
 

 
(905
)
 
175,289

 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings per share—basic(b)
 
$
2.14

 
(0.21
)
 

 

 
(0.01
)
 
1.91

Earnings per share—diluted(b)
 
2.11

 
(0.21
)
 

 

 
(0.01
)
 
1.89

(a) "Restated" amounts include royalty income of $515.2 million and initial, renewal, and other franchise fees of $21.2 million.
(b) Amounts may not recalculate due to rounding.






DUNKIN’ BRANDS GROUP, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(In thousands)
(Unaudited)
 
 
December 30, 2017
 
 
 
 
Adjustments for new revenue recognition guidance
 
 
 
 
As reported
 
Franchise fees
 
Advertising
 
Other revenue transactions
 
Restated
 
 
 
 
 
 
 
 
 
 
 
Assets
 
 
 
 
 
 
 
 
 
 
Current assets:
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
 
$
1,018,317

 

 
—   

 

 
1,018,317

Restricted cash
 
94,047

 

 
—   

 

 
94,047

Accounts receivables, net
 
51,442

 

 
18,075

 

 
69,517

Notes and other receivables, net
 
51,082

 

 
1,250

 

 
52,332

Restricted assets of advertising funds
 
47,373

 

 
(47,373
)
 

 

Prepaid income taxes
 
21,879

 

 
48

 

 
21,927

Prepaid expenses and other current assets
 
32,695

 

 
15,498

 

 
48,193

Total current assets
 
1,316,835

 

 
(12,502
)
 

 
1,304,333

Property and equipment, net
 
169,005

 

 
12,537

 

 
181,542

Equity method investments
 
140,615

 

 
—   

 

 
140,615

Goodwill
 
888,308

 

 
—   

 

 
888,308

Other intangibles assets, net
 
1,357,157

 

 
—   

 

 
1,357,157

Other assets
 
65,464

 

 
14

 

 
65,478

Total assets
 
$
3,937,384

 

 
49

 

 
3,937,433

Liabilities and Stockholders’ Equity (Deficit)
 
 
 
 
 
 
 
 
 
 
Current liabilities:
 
 
 
 
 
 
 
 
 
 
Current portion of long-term debt
 
$
31,500

 
—   

 
—   

 
—   

 
31,500

Capital lease obligations
 
596

 
—   

 
—   

 
—   

 
596

Accounts payable
 
16,307

 
—   

 
37,110

 
—   

 
53,417

Liabilities of advertising funds
 
58,014

 
—   

 
(58,014
)
 
—   

 

Deferred income
 
39,395

 
1,502

 
(550
)
 
4,529

 
44,876

Other current liabilities
 
326,078

 
—   

 
29,032

 
—   

 
355,110

Total current liabilities
 
471,890

 
1,502

 
7,578

 
4,529

 
485,499

Long-term debt, net
 
3,035,857

 
—   

 
—   

 
—   

 
3,035,857

Capital lease obligations
 
7,180

 
—   

 
—   

 
—   

 
7,180

Unfavorable operating leases acquired
 
9,780

 
—   

 
—   

 
—   

 
9,780

Deferred income
 
11,158

 
328,183

 
(7,518
)
 
29,635

 
361,458

Deferred income taxes, net
 
315,249

 
(91,488
)
 
—   

 
(9,416
)
 
214,345

Other long-term liabilities
 
77,823

 
—   

 
30

 
—   

 
77,853

Total long-term liabilities
 
3,457,047

 
236,695

 
(7,488
)
 
20,219

 
3,706,473

Stockholders’ equity (deficit)
 
 
 
 
 
 
 
 
 
 
Preferred stock
 

 
—   

 
—   

 
—   

 

Common stock
 
90

 
—   

 
—   

 
—   

 
90

Additional paid-in-capital
 
724,114

 
—   

 
—   

 
—   

 
724,114

Treasury stock, at cost
 
(1,060
)
 
—   

 
—   

 
—   

 
(1,060
)
Accumulated deficit
 
(705,007
)
 
(238,197
)
 
(196
)
 
(24,748
)
 
(968,148
)
Accumulated other comprehensive loss
 
(9,690
)
 
—   

 
155

 
—   

 
(9,535
)
Stockholders’ equity (deficit)
 
8,447

 
(238,197
)
 
(41
)
 
(24,748
)
 
(254,539
)
Total liabilities and stockholders’ equity (deficit)
 
$
3,937,384

 

 
49

 

 
3,937,433







DUNKIN’ BRANDS GROUP, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(In thousands)
(Unaudited)
 
 
December 31, 2016
 
 
 
 
Adjustments for new revenue recognition guidance
 
 
 
 
As reported
 
Franchise fees
 
Advertising
 
Other revenue transactions
 
Restated
 
 
 
 
 
 
 
 
 
 
 
Assets
 
 
 
 
 
 
 
 
 
 
Current assets:
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
 
$
361,425

 

 
—   

 

 
361,425

Restricted cash
 
69,746

 

 
—   

 

 
69,746

Accounts receivables, net
 
44,512

 

 
17,741

 

 
62,253

Notes and other receivables, net
 
40,672

 

 
592

 

 
41,264

Restricted assets of advertising funds
 
40,338

 

 
(40,338
)
 

 

Prepaid income taxes
 
20,926

 

 
36

 

 
20,962

Prepaid expenses and other current assets
 
28,739

 

 
12,823

 

 
41,562

Total current assets
 
606,358

 

 
(9,146
)
 

 
597,212

Property and equipment, net
 
176,662

 

 
9,153

 

 
185,815

Equity method investments
 
114,738

 

 
—   

 

 
114,738

Goodwill
 
888,272

 

 
—   

 

 
888,272

Other intangibles assets, net
 
1,378,720

 

 
—   

 

 
1,378,720

Other assets
 
62,632

 

 
30

 

 
62,662

Total assets
 
$
3,227,382

 

 
37

 

 
3,227,419

Liabilities and Stockholders’ Deficit
 
 
 
 
 
 
 
 
 
 
Current liabilities:
 
 
 
 
 
 
 
 
 
 
Current portion of long-term debt
 
$
25,000

 
—   

 
—   

 
—   

 
25,000

Capital lease obligations
 
589

 
—   

 
—   

 
—   

 
589

Accounts payable
 
12,682

 
—   

 
34,806

 
—   

 
47,488

Liabilities of advertising funds
 
52,271

 
—   

 
(52,271
)
 
—   

 

Deferred income
 
35,393

 
2,699

 
(591
)
 
4,812

 
42,313

Other current liabilities
 
298,266

 
—   

 
26,293

 
—   

 
324,559

Total current liabilities
 
424,201

 
2,699

 
8,237

 
4,812

 
439,949

Long-term debt, net
 
2,401,998

 
—   

 
—   

 
—   

 
2,401,998

Capital lease obligations
 
7,550

 
—   

 
—   

 
—   

 
7,550

Unfavorable operating leases acquired
 
11,378

 
—   

 
—   

 
—   

 
11,378

Deferred income
 
12,154

 
269,394

 
(8,186
)
 
31,010

 
304,372

Deferred income taxes, net
 
461,810

 
(110,144
)
 
—   

 
(14,500
)
 
337,166

Other long-term liabilities
 
71,549

 
—   

 
45

 
—   

 
71,594

Total long-term liabilities
 
2,966,439

 
159,250

 
(8,141
)
 
16,510

 
3,134,058

Stockholders’ deficit:
 
 
 
 
 
 
 
 
 
 
Preferred stock
 
—   

 
—   

 
—   

 
—   

 

Common stock
 
91

 
—   

 
—   

 
—   

 
91

Additional paid-in-capital
 
807,492

 
—   

 
—   

 
—   

 
807,492

Treasury stock, at cost
 
(1,060
)
 
—   

 
—   

 
—   

 
(1,060
)
Accumulated deficit
 
(945,797
)
 
(161,949
)
 
(170
)
 
(21,322
)
 
(1,129,238
)
Accumulated other comprehensive loss
 
(23,984
)
 
—   

 
111

 
—   

 
(23,873
)
Stockholders’ deficit
 
(163,258
)
 
(161,949
)
 
(59
)
 
(21,322
)
 
(346,588
)
Total liabilities and stockholders’ deficit
 
$
3,227,382

 

 
37

 

 
3,227,419







DUNKIN’ BRANDS GROUP, INC. AND SUBSIDIARIES
Select Cash Flow Information
(In thousands)
(Unaudited)
 
 
 
 
 
 
 
 
Fiscal year ended December 30, 2017
 
 
As reported
 
Adjustments for new revenue recognition guidance(a)
 
Restated
 
 
 
 
 
 
 
Net cash provided by operating activities
 
$
276,908

 
6,449

 
283,357

Net cash used in investing activities
 
(13,854
)
 
(6,449
)
 
(20,303
)
Net cash provided by financing activities
 
418,641

 

 
418,641

Increase in cash, cash equivalents, and restricted cash
 
682,267

 

 
682,267

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fiscal year ended December 31, 2016
 
 
As reported
 
Adjustments for new revenue recognition guidance(a)
 
Restated
 
 
 
 
 
 
 
Net cash provided by operating activities
 
$
276,827

 
5,652

 
282,479

Net cash provided by (used in) investing activities
 
1,343

 
(5,652
)
 
(4,309
)
Net cash used in financing activities
 
(179,178
)
 

 
(179,178
)
Increase in cash, cash equivalents, and restricted cash
 
98,717

 

 
98,717

(a) Adjustment results from full consolidation of the advertising funds, and reflects the investing activities, consisting solely of additions to property and equipment, of such funds.





Quarterly Consolidated Statements of Operations—Fiscal Year 2017
The following consolidated statements of operations for each quarter within the fiscal year ended December 30, 2017 reflect the expected impacts of the adoption of the new guidance for revenue recognition:

DUNKIN’ BRANDS GROUP, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
 
 
Three months ended
 
 
April 1, 2017
 
July 1, 2017
 
September 30, 2017
 
December 30, 2017
 
 
(Restated)
 
(Restated)
 
(Restated)
 
(Restated)
Revenues:
 
 
 
 
 
 
 
 
Franchise fees and royalty income
 
$
127,715

 
143,894

 
143,734

 
139,863

Advertising fees and related income
 
110,203

 
122,361

 
122,660

 
115,760

Rental income
 
24,422

 
27,408

 
27,713

 
25,100

Sales of ice cream and other products
 
22,506

 
28,679

 
23,173

 
22,030

Other revenues
 
11,512

 
11,834

 
12,791

 
12,193

Total revenues
 
296,358

 
334,176

 
330,071

 
314,946

Operating costs and expenses:
 
 
 
 
 
 
 
 
Occupancy expenses—franchised restaurants
 
14,138

 
14,287

 
15,333

 
16,543

Cost of ice cream and other products
 
16,922

 
22,199

 
19,457

 
18,434

Advertising expenses
 
111,072

 
123,676

 
124,080

 
117,329

General and administrative expenses, net
 
60,369

 
61,074

 
60,580

 
61,805

Depreciation
 
5,084

 
5,071

 
4,941

 
4,988

Amortization of other intangible assets
 
5,327

 
5,333

 
5,341

 
5,334

Long-lived asset impairment charges
 
47

 
60

 
536

 
974

Total operating costs and expenses
 
212,959

 
231,700

 
230,268

 
225,407

Net income of equity method investments
 
2,819

 
4,327

 
5,466

 
2,586

Other operating income, net
 
555

 
33

 
3

 
36

Operating income
 
86,773

 
106,836

 
105,272

 
92,161

Other income (expense), net:
 
 
 
 
 
 
 
 
Interest income
 
321

 
425

 
624

 
1,943

Interest expense
 
(24,871
)
 
(24,885
)
 
(24,436
)
 
(30,231
)
Loss on debt extinguishment and refinancing transactions
 
—    

 
—    

 
—    

 
(6,996
)
Other gains, net
 
187

 
28

 
155

 
21

Total other expense, net
 
(24,363
)
 
(24,432
)
 
(23,657
)
 
(35,263
)
Income before income taxes
 
62,410

 
82,404

 
81,615

 
56,898

Provision (benefit) for income taxes
 
18,117

 
31,312

 
40,445

 
(77,756
)
Net income
 
$
44,293

 
51,092

 
41,170

 
134,654

 
 
 
 
 
 
 
 
 
Earnings per share—basic
 
$
0.48

 
0.56

 
0.46

 
1.49

Earnings per share—diluted
 
0.48

 
0.55

 
0.45

 
1.47








Non-GAAP Reconciliations—Fiscal Years 2017 and 2016
The following non-GAAP reconciliations reflect the impacts of the adoption of the new guidance for revenue recognition:

DUNKIN’ BRANDS GROUP, INC. AND SUBSIDIARIES
Non-GAAP Reconciliations
(In thousands, except share and per share data)
(Unaudited)
 
 
Fiscal year ended
 
 
December 30, 2017
 
December 31, 2016
 
 
(52 weeks)
 
(53 weeks)
Operating income
 
$
391,042

 
380,602

Adjustments:
 
 
 
 
Amortization of other intangible assets
 
21,335

 
22,079

Long-lived asset impairment charges
 
1,617

 
149

Transaction-related costs(a)
 

 
64

Bertico-related litigation(b)
 
(2,898
)
 
(428
)
Adjusted operating income
 
$
411,096

 
402,466

 
 
 
 
 
Net income attributable to Dunkin' Brands
 
$
271,209

 
175,289

Adjustments:
 
 
 
 
Amortization of other intangible assets
 
21,335

 
22,079

Long-lived asset impairment charges
 
1,617

 
149

Transaction-related costs(a)
 

 
64

Bertico-related litigation(b)
 
(2,898
)
 
(428
)
Loss on debt extinguishment and refinancing transactions
 
6,996

 

Tax impact of adjustments(c)
 
(10,820
)
 
(8,746
)
Impact of tax reform(d)
 
(96,803
)
 

Adjusted net income
 
$
190,636

 
188,407

 
 
 
 
 
Adjusted net income
 
$
190,636

 
188,407

Weighted average number of common shares – diluted
 
92,231,436

 
92,538,282

Diluted adjusted earnings per share
 
$
2.07

 
2.04

 
 
 
 
 
(a) Represents non-capitalizable costs incurred as a result of the securitized financing facility, which was completed in January 2015.
(b) Adjustment for the fiscal year ended December 30, 2017 represents a reduction to legal reserves for Bertico-related litigation based upon final settlement of such matters. Adjustment for the fiscal year ended December 31, 2016 represents a net reduction to legal reserves for the Bertico litigation and related matters based upon final agreement of interest and related costs associated with the judgment.
(c) Tax impact of adjustments calculated at a 40% effective tax rate.
(d) Net tax benefit due to the enactment of the Tax Cuts and Jobs Act during the fiscal year ended December 30, 2017, consisting primarily of the re-measurement of deferred tax liabilities using the lower enacted corporate tax rate.