Popeye's 2012 Annual Report Download - page 10

1. Victor Arias, Jr.
Senior Client Partner:
Korn/Ferry International
Director since: 2001 Age: 56
2. John F. Hoffner
Director: AFC Enterprises, Inc.
Director since: 2006 Age: 65
3. Kelvin J. Pennington
President: Pennington
Partners & Co.
Director since: 1996 Age: 54
4. John M. Cranor, III
Chairman: AFC Enterprises, Inc.
Director since: 2006 Age: 66
5. Cheryl A. Bachelder
Chief Executive Officer:
AFC Enterprises, Inc.
Director since: 2006 Age: 56
6. R. William Ide, III
Partner: McKenna Long &
Aldridge, LLP
Director since: 2001 Age: 72
7. Carolyn Hogan Byrd
Founder, Chair & Chief Executive
Officer: GlobalTech Financial, LLC
Director since: 2001 Age: 64
8. Krishnan Anand
President: International Division of
Molson Coors Brewing Company
Director since: 2010 Age: 55
Board of Directors [Left to right]
(1) Additional information concerning financial performance can be found in AFC’s Consolidated Financial Statements and Management’s Discussion & Analysis of Financial Condition and Results of Operations in the 2012 Annual Report
on Form 10-K, including, without limitations, information in Item 7 of the Annual Report related to total revenues.
(2) Weighted average common shares for the computation of diluted earnings per common share were 24.5 million, 25.0 million and 25.5 million for 2012, 2011 and 2010, respectively.
(Dollars in millions) 2012 2011 2010
Net income $ 30.4 $ 24.2 $ 22.9
Depreciation and amortization $ 4.6 $ 4.2 $ 3.9
Stock-based compensation expense $ 4.9 $ 2.9 $ 2.7
Maintenance capital expenses $ (3.2) $ (2.8) $ (3.2)
Free cash flow $ 36.7 $ 28.5 $ 26.3
Total revenues $ 178.8 $ 153.8 $ 146.4
Free cash flow as a percentage of total revenues
(Free cash flow margin) 20.5% 18.5% 18.0%
(Dollars in millions) 2012 2011 2010
Net income $ 30.4 $ 24.2 $ 22.9
Interest expense, net $ 3.6 $ 3.7 $ 8.0
Income tax expense $ 17.3 $ 12.8 $ 10.3
Depreciation and amortization $ 4.6 $ 4.2 $ 3.9
Other expenses (income), net $ (0.5) $ 0.5 $ 0.2
Legal fees related to licensing arrangements $ 0.5 — —
Operating EBITDA $ 55.9 $ 45.4 $ 45.3
Total revenues $ 178.8 $ 153.8 $ 146.4
Operating EBITDA as a percentage of total revenues 31.3% 29.5% 30.9%
(In millions, except per share data) 2012 2011 2010
Net income $ 30.4 $ 24.2 $ 22.9
Other expenses (income), net $ (0.5) $ 0.5 $ 0.2
Accelerated depreciation related to the Company’s
relocation to a new Global Service Center — $ 0.5 —
Fees related to licensing arrangements $ 0.5 — —
Interest charges associated with refinancing of credit facility — — $ 0.6
Tax audit benefit — — $ (1.4)
Tax effect — $ (0.5) $ (0.3)
Adjusted net income $ 30.4 $ 24.7 $ 22.0
Adjusted earnings per diluted share $ 1.24 $ 0.99 $ 0.86
Weighted average diluted shares outstanding 24.5 25.0 25.5
(6) Adjusted earnings per share, Operating EBITDA, Company-operated restaurant operating profit margins,
and Free cash flow are supplemental non-GAAP financial measures. The Company uses Adjusted earnings
per share, Operating EBITDA, Company-operated restaurant operating profit margins, and Free cash flow, in
addition to net income, operating profit and cash flows from operating activities, to assess its performance
and believes it is important for investors to be able to evaluate the Company using the same measures used by
management. The Company believes these measures are important indicators of its operational strength and
the performance of its business. Company-operated restaurant operating profit margins, Operating EBITDA, free
cash flow and adjusted earnings per diluted share as calculated by the Company are not necessarily comparable
to similarly titled measures reported by other companies. In addition, Company-operated restaurant operating
profit margins, Operating EBITDA, free cash flow and adjusted earnings per diluted share: (a) do not represent
net income, cash flows from operations or earnings per share as defined by GAAP; (b) are not necessarily
indicative of cash available to fund cash flow needs; and (c) should not be considered as an alternative to net
income, earnings per share, operating profit, cash flows from operating activities or other financial information
determined under GAAP.
(7) System-wide sales growth calculates combined sales of all restaurants that we operate or franchise. Sales
information for franchised restaurants is provided by our franchisees. System-wide sales are unaudited.
(4) The Company defines Operating EBITDA as “earnings before interest expense, taxes, depreciation and amortization, other
expenses (income), net, and legal fees related to licensing arrangements”. The following table reconciles on a historical
basis for 2012, 2011 and 2010, the Company’s earnings before interest expense, taxes, depreciation and amortization, and
other expenses (income), net, and legal fees related to licensing arrangements (“Operating EBITDA”) on a consolidated
basis to the line on its consolidated statement of operations entitled net income, which the Company believes is the most
directly comparable GAAP measure on its consolidated statement of operations to Operating EBITDA. “Operating EBITDA
as a percentage of total revenues” is defined as “Operating EBITDA” divided by “Total revenues”.
(5) The Company defines “Free cash flow” as “net income” plus “depreciation and amortization”, plus “stock-
based compensation expense”, minus “maintenance capital expenditures” (which includes: for fiscal 2012
$0.6 million in Company-operated restaurant reimages, $1.1 million of information technology hardware and
software and $1.5 million in other capital assets to maintain, replace and extend the lives of Company-operated
restaurant facilities, and for fiscal 2011 $1.5 million in Company-operated restaurant reimages, $0.8 million
of information technology hardware and software and $0.5 million in other capital assets to maintain, replace
and extend the lives of Company-operated restaurant facilities and for fiscal 2010 $1.4 million for information
technology hardware and software, $1.2 million for reopening a Company restaurant in New Orleans and
restaurant reimaging and corporate office construction and $0.6 million in other capital assets to maintain,
replace and extend the lives of Company-operated facilities and equipment). In 2012, maintenance capital
expenditures exclude $16.9 million related to the acquired restaurants in Minnesota and California and $7.2
million for the construction of new Company-operated restaurants. In 2011, maintenance capital expenditures
exclude $3.3 million related to the construction of the new corporate office, and $1.5 million for the construction
of new Company-operated restaurants. The following table reconciles on a historical basis for fiscal 2012, fiscal
2011 and fiscal 2010, the Company’s “Free cash flow” on a consolidated basis to the line on its consolidated
statement of operations entitled net income, which the Company believes is the most directly comparable GAAP
measure on its consolidated statement of operations to “Free cash flow.” “Free cash flow as a percentage of
total revenues (Free cash flow margin)” is defined as “Free cash flow” divided by “Total revenues”:
(3) The Company defines adjusted earnings for the periods presented as the Company’s reported net income after
adjusting for certain non-operating items consisting of the following: (i) other expense (income), net, as follows:
Fiscal 2012 includes $0.9 million in gains on sale of real estate assets to franchisees partially offset by $0.3 million
loss on disposals of property and equipment and $0.1 million of hurricane-related expenses, net. Fiscal 2011
includes $0.8 million in expenses for the global service center relocation, and $0.5 million in disposals of fixed
assets offset by a $0.8 net gain on the sale of assets; Fiscal 2010 includes $0.7 million for impairments and disposals
of fixed assets partially offset by $0.5 million for net gain on sales of assets; (ii) for Fiscal 2011, $0.5 million in
accelerated depreciation related to the Company’s relocation to a new Global Service Center; (iii) for Fiscal 2012,
$0.5 million in legal fees related to licensing arrangements; (iv) for Fiscal 2010, the interest charges associated
with the refinancing of the Company’s credit facility; (v) for Fiscal 2010, a $1.4 million tax audit benefit related to
the completion of a federal income tax audit for years 2004 and 2005; and (vi) the tax effect of these adjustments.
Adjusted earnings per diluted share provides the per share effect of adjusted net income on a diluted basis. The
following table reconciles on a historical basis for fiscal 2012, fiscal 2011 and fiscal 2010, the Company’s adjusted
earnings per diluted share on a consolidated basis to the line on its consolidated statement of operations entitled net
income, which the Company believes is the most directly comparable GAAP measure on its consolidated statement of
operations to adjusted earnings per diluted share:
8AFC ENTERPRISES, INC.