What was the reclassification of loss on cash flow hedge, net of tax benefit, for Brueggers Bagels?
Brueggers_Bagels Franchise · 2025 FDDAnswer from 2025 FDD Document
ibou Coffee Company, Inc. and Affiliates | $ 55,963 | $ 57,740 | $ 48,684 |
CARIBOU COFFEE COMPANY, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (in thousands)
| Fiscal Year Ended | |||||
|---|---|---|---|---|---|
| December 31, 2024 | December 26, 2023 | December 27, 2022 | |||
| Net income | $ 57,695 | $ | 59,540 | $ | 50,215 |
| Other comprehensive income | |||||
| Unrealized gain on cash flow hedges, net of tax expense of $0, $0, and $283 for the fiscal years ended | |||||
| December 31, 2024, December 26, 2023, and December 27, 2022, respectively | – | – | 817 | ||
| Reclassification of loss on cash flow hedge, net of tax benefit of $0, $0, and $825 for the fiscal years ended | |||||
| December 31, 2024, December 26, 2023, and December 27, 2022, respectively | – | – | 2,375 | ||
| Settlement of PNC derivative securities and novation of BNP and Rabo derivative securities | – | – | 475 | ||
| Comprehensive income attributable to Caribou Coffee Company, Inc. |
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 61)
What This Means (2025 FDD)
According to Brueggers Bagels's 2025 Franchise Disclosure Document, the reclassification of loss on cash flow hedge, net of tax benefit, was only specified for the fiscal year ended December 27, 2022. For this period, the reclassification of loss on cash flow hedge, net of tax benefit of $825, was $2,375. The document indicates that for the fiscal years ended December 31, 2024, and December 26, 2023, the reclassification of loss on cash flow hedge, net of tax benefit, was $0.
This information is relevant to a prospective Brueggers Bagels franchisee as it provides insight into the company's financial management and how it handles its exposure to market-based risks, specifically interest rates, through derivative transactions like cash flow hedges. The use of cash flow hedges can impact the company's net earnings, and understanding how these gains or losses are reclassified can help a franchisee assess the financial stability and risk management practices of Brueggers Bagels.
The fact that Brueggers Bagels had a significant reclassification of loss in 2022 but none in 2023 and 2024 could indicate changes in their hedging strategies or the overall interest rate environment. It's also important to note that the company settled one interest rate swap contract and novated the remaining two to Panera Brands, Inc. during the fiscal year ended December 27, 2022, and held no cash flow hedging instruments as of December 31, 2024, December 26, 2023, or December 27, 2022. This suggests a shift away from using these instruments for risk management, at least as of the dates covered in the FDD.