Popeye's 2015 Annual Report Download - page 44

Accounting Pronouncements That We Have Not Yet Adopted
See Note 3 to the Consolidated Financial Statements for impacts of accounting pronouncements which have been issued
but not yet adopted on the Company's financial position and the results of operations.
Management’s Use of Non-GAAP Financial Measures
Adjusted earnings per diluted share, operating EBITDA, Company-operated restaurant operating profit, free cash flow and
consolidated total leverage ratio are supplemental non-GAAP financial measures. The Company uses adjusted earnings per
diluted share, operating EBITDA, company-operated restaurant operating profit, free cash flow and consolidated total leverage
ratio, 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, free cash flow and consolidated total
leverage ratio 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,
free cash flow and consolidated total leverage ratio: (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 2015 includes $0.4 million for recoveries under Deepwater Horizon Economic and Property Damages
Settlement Program and $0.2 million net gain on the sale of assets offset by $0.5 million related to executive
transition expenses and $0.1 million net loss on disposal of fixed assets;
• fiscal 2014 includes $2.0 million related to executive transition expenses, $0.2 million on loss of disposals of
property and equipment partially offset by $1.0 million in net gain on the sale of assets;
ii. for fiscal 2014, $0.5 million in tax expense for an out-of-period adjustment to the Company's deferred tax liability
associated with its indefinite lived intangible assets as discussed in Note 18 to the Condensed Consolidated Financial
Statements; and
iii. 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 a diluted basis. The following
table reconciles on a historical basis for fiscal years 2015 and 2014, 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:
(In millions, except per share data) 2015 2014
Net income $ 44.1 $ 38.0
Other expense (income), net — 1.2
Deferred tax liability adjustment — 0.5
Tax effect — (0.5)
Adjusted net income $ 44.1 $ 39.2
Adjusted earnings per diluted share $ 1.91 $ 1.65
Weighted average diluted shares outstanding 23.1 23.8
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