Strategic alternatives expenses were $0.4 million in the second quarter of 2012 for which there was no comparable expense in the second quarter of 2011.
Adjusted EBITDA rose 13.7% to $11.0 million in the second quarter of 2012 compared to $9.7 million in the second quarter of 2011. (*)
Income from operations decreased by $0.4 million to $5.6 million in the second quarter of 2012. In the second quarter of 2011, the Company recorded a gain of $0.9 million on the sale of two restaurants to a franchisee and the receipt of insurance proceeds related to a fire at one Company-owned restaurant.
Net income was $3.0 million or $0.17 per diluted share, which included $0.02 per diluted share for charges related to the strategic alternatives review process. This compares to net income of $3.1 million, or $0.18 per diluted share, in the second quarter of 2011, which included a gain of $0.03 per diluted share related to the sale of two restaurants to a franchisee and the receipt of insurance proceeds related to a fire at one Company-owned restaurant.* A reconciliation of the non-GAAP measure to the nearest GAAP measure can be found in the accompanying tables below. Restaurant Development As of July 3, 2012, there were 783 Einstein Bros.® Bagels, Noah's New York Bagels®, and Manhattan Bagel® branded restaurants in operation. During the second quarter of 2012, the Company added 10 restaurants to its operations and ended the quarter with 448 Company-owned and operated restaurants, while franchisees and licensees ended the period with 95 and 240 restaurants, respectively. Fiscal Year 2012 Guidelines The Company is providing the following updated guidelines for the 52-week period and as noted.
- 60 to 80 system-wide openings, including 8 to 12 Company-owned restaurants, 12 to 14 franchise restaurants, and 40 to 54 license restaurants.
- Capital expenditures of $24 million to $26 million.
- Commodity inflation of 2% to 3%.
- The Company has secured price protection on approximately 90% and 100% of its wheat and coffee requirements, respectively.
- General and administrative expenses of $10 million to $11 million per quarter, which includes incentive compensation expenditures.
- An annual effective tax rate of approximately 39%; however, the Company will continue to only pay minimal cash-taxes for the next several years.
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