Popeye's 2013 Annual Report Download - page 47

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31
otherwise, then it is required to determine the fair value of the indefinite-lived intangible asset and perform the
quantitative impairment test by comparing the fair value with the carrying amount. This guidance was effective for the
Company in the first quarter of fiscal 2013. The measurement provisions of this guidance did not impact our financial
statements and all necessary disclosures have been complied with in this Form 10-K.
Effective December 31, 2012, the Company adopted Accounting Standards Update 2013-02, “Reporting of Amounts
Reclassified Out of Accumulated Other Comprehensive Income.” The updated standard requires the reporting of
reclassifications out of accumulated other comprehensive income (“AOCI”). We are required to present either on the
face of the statement where net income is presented or in the notes to the financial statements significant amounts
reclassified out of accumulated other comprehensive income (loss) by the respective line items of net income. All
necessary disclosures have been complied with in this Form 10-K.
Accounting Pronouncements That We Have Not Yet Adopted
Accounting standards that have been issued by the FASB or other standards-setting bodies that do not require adoption
until afuture date are expected to have an immaterial impact on the financial statements upon adoption.
Management’s Use of Non-GAAP Financial Measures
Adjusted earnings per diluted share, Operating EBITDA, Company-operated restaurant operating profit and Free
cash flow are supplemental non-GAAP financial measures. The Company uses Adjusted earnings per diluted share,
Operating EBITDA, Company-operated restaurant operating profit 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. Adjusted earnings
per diluted share, Operating EBITDA, Company-operated restaurant operating profit and Free cash flow as calculated
by the Company are not necessarily comparable to similarly titled measures reported by other companies. In addition,
Adjusted earnings per diluted share, Operating EBITDA, Company-operated restaurant operating profit and Free cash
flow: (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.
Adjusted Earnings Per Diluted Share: Calculation and Definition
The Company defines adjusted net income 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 2013 includes $0.4 million loss on disposal of property and equipment partially offset by $0.1
million in net gain on sale of assets;
• 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;
ii. for fiscal 2013, $0.4 million in interest expense from the retirement of the 2010 Credit Facility;
iii. for fiscal 2012, $0.5 million in legal fees related to licensing arrangements; and
iv.the tax effect of these adjustments at the effective statutory rates.
Adjusted earnings per diluted share provides the per share effect of adjusted net income on adiluted basis. The following
table reconciles on ahistorical basis for fiscal years 2013 and 2012, the Company’sadjusted earnings per diluted share
on aconsolidated 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: