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AFC Enterprises Reports Fiscal 2012 Results; Provides Fiscal 2013 Guidance

The Popeyes system opened 141 restaurants in 2012, which included 84 domestic and 57 international restaurants, compared to 140 openings in 2011. The Popeyes system permanently closed 75 restaurants in fiscal 2012 comprised of 29 domestic and 46 international restaurants. Net restaurant openings were 66, compared to 65 net restaurant openings last year.

On a system-wide basis, Popeyes had 2,104 restaurants operating at the end of fiscal 2012, compared to 2,035 restaurants at the end of last year. Total restaurant count was comprised of 1,679 domestic restaurants and 425 international restaurants in 26 foreign countries and three territories. Of this total, 2,059 were franchised restaurants and 45 were Company-operated restaurants.

Long-Term Guidance

Consistent with previous guidance, over the course of the upcoming five years, the Company believes the execution of its Strategic Plan will deliver on an average annualized basis the following results: same-store sales growth of 1 to 3%; net unit growth of 4 to 6%; and earnings per diluted share growth of 13 to 15%.

Conference Call

The Company will host a conference call and internet webcast with the investment community at 9:00 A.M. Eastern Time on February 28, 2013, to review the results of the fourth quarter and full year fiscal 2012. To access the Company’s webcast, go to www.afce.com, select “Investor Information” and then select “AFC Enterprises Fiscal 2012 Earnings Conference Call.” A replay of the conference call will be available for 90 days at the Company’s website or through a dial-in number for a limited time following the call.

Corporate Profile

AFC Enterprises, Inc. is the franchisor and operator of Popeyes® restaurants, the world's second-largest quick-service chicken concept based on number of units. As of December 30, 2012, Popeyes had 2,104 operating restaurants in the United States, 3 territories, and 26 foreign countries. AFC’s primary objective is to deliver sales and profits by offering excellent investment opportunities in its Popeyes brand and providing exceptional franchisee support systems and services to its owners. AFC Enterprises can be found at www.afce.com.

Supplemental Financial Information on pages 8-17

AFC Enterprises, Inc.
Consolidated Balance Sheets
As of December 30, 2012 and December 25, 2011
(In millions, except share data)
       
ASSETS 2012   2011  
Current assets:
Cash and cash equivalents $ 17.0 $ 17.6
Accounts and current notes receivable, net 7.3 7.0
Other current assets 4.2 4.8
Advertising cooperative assets, restricted 25.7   18.9  
Total current assets 54.2   48.3  
Long-term assets:
Property and equipment, net 51.3 27.4
Goodwill 11.1 11.1
Trademarks and other intangible assets, net 53.9 46.5
Other long-term assets, net 1.9   2.3  
Total long-term assets 118.2   87.3  
Total assets $ 172.4   $ 135.6  
 
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 7.6 $ 6.1
Other current liabilities 5.9 8.2
Current debt maturities 6.0 5.2
Advertising cooperative liabilities 25.7   18.9  
Total current liabilities 45.2   38.4  
Long-term liabilities:
Long-term debt 66.8 58.8
Deferred credits and other long-term liabilities 26.2   24.6  
Total long-term liabilities 93.0   83.4  
 
Commitments and contingencies
Shareholders' equity:
Preferred stock ($.01 par value; 2,500,000 shares authorized;
0 issued and outstanding) - -
Common stock ($.01 par value; 150,000,000 shares authorized;
23,907,428 and 24,383,274 shares issued and outstanding
at the end of fiscal years 2012 and 2011, respectively) 0.2 0.2
Capital in excess of par value 87.6 97.6
Accumulated deficit (52.8 ) (83.2 )
Accumulated other comprehensive loss (0.8 ) (0.8 )
Total shareholders' equity 34.2   13.8  
 
Total liabilities and shareholders' equity $ 172.4   $ 135.6  
 
 
AFC Enterprises, Inc.
Consolidated Statements of Operations
(In millions, except per share data)
     
12 Weeks Ended Year Ended
12/30/12     12/25/11 12/30/12     12/25/11
(unaudited) (unaudited) (53 weeks) (52 weeks)
 
Revenues:
Sales by Company-operated restaurants $ 16.4 $ 12.4 $ 64.0 $ 54.6
Franchise revenues 30.1 22.9 110.5 95.0
Rent and other revenues 1.0   1.0 4.3   4.2
Total revenues 47.5   36.3 178.8   153.8
 
Expenses:
Restaurant employee, occupancy and other
expenses 8.1 5.5 31.2 26.1
Restaurant food, beverages and packaging 5.7 4.2 21.7 18.3
Rent and other occupancy expenses 0.8 0.6 2.9 2.7
General and administrative expenses 17.9 15.1 67.6 61.3
Depreciation and amortization 1.1 1.0 4.6 4.2
Other expenses (income), net (0.7 ) 0.5 (0.5 ) 0.5
Total expenses 32.9   26.9 127.5   113.1
 
Operating profit 14.6 9.4 51.3 40.7
Interest expense, net 0.9   0.9 3.6   3.7
 
Income before income taxes 13.7 8.5 47.7 37.0
Income tax expense 5.1   2.8 17.3   12.8
 
Net income $ 8.6   $ 5.7 $ 30.4   $ 24.2
 
Earnings per common share, basic: $ 0.36   $ 0.25 $ 1.27   $ 0.99
 
Earnings per common share, diluted: $ 0.35   $ 0.23 $ 1.24   $ 0.97
 
Weighted-average shares outstanding
Basic 23.6 24.0 23.9 24.5
Diluted 24.3 24.5 24.5 25.0
 
 
AFC Enterprises, Inc.
Consolidated Statements of Cash Flows
(In millions)
       
2012     2011  
Cash flows provided by (used in) operating activities:
Net income $ 30.4 $ 24.2
Adjustments to reconcile net income to net cash provided by (used in)
operating activities:
Depreciation and amortization 4.6 4.2
Disposals of property and equipment 0.3 0.5
Net gain on sale of assets (0.9 ) (0.8 )
Deferred income taxes 2.2 1.3
Non-cash interest expense, net 0.4 0.5
Provision for credit losses (recoveries) (0.1 ) (0.3 )
Excess tax benefit from share-based payment arrangements (0.4 ) (0.1 )
Stock-based compensation expense 4.9 2.9
Change in operating assets and liabilities:
Accounts receivable (0.2 ) (1.4 )
Other operating assets 0.8 (0.2 )
Accounts payable and other operating liabilities (1.8 )   1.3  
Net cash provided by operating activities 40.2     32.1  
 
Cash flows provided by (used in) investing activities:
Capital expenditures (27.3 ) (7.6 )
Proceeds from dispositions of property and equipment 0.4 0.7
Investment in trademark (8.0 ) -
Proceeds from notes receivable and other investing activities -     0.3  
Net cash used in investing activities (34.9 )   (6.6 )
 
Cash flows provided by (used in) financing activities:
Principal payments – 2010 Credit Facility (term loan) (5.0 ) (3.8 )
Borrowings under 2010 revolving credit facility 13.0 2.0
Excess tax benefits from share-based payment arrangements 0.4 0.1
Share repurchases (15.2 ) (22.3 )
Proceeds from exercise of employee stock options 1.3 0.6
Other financing activities, net (0.4 )   (0.4 )
Net cash used in financing activities (5.9 )   (23.8 )
 
Net increase (decrease) in cash and cash equivalents (0.6 ) 1.7
Cash and cash equivalents at beginning of year 17.6     15.9  
Cash and cash equivalents at end of year $ 17.0   $ 17.6  
 
 
  12 Weeks ended       Year Ended
12/30/12       12/25/11         12/30/12       12/25/11  
Same-store sales growth (1)                  
Company-operated restaurants 7.8 % (1.5 %) 5.3 % 1.1 %
Domestic franchised restaurants 6.4 % 6.2 % 7.5 % 3.1 %
Total domestic (Company-operated and franchised restaurants) 6.4 % 5.9 % 7.5 % 3.0 %
International franchised restaurants 4.3 % 4.6 % 2.6 % 3.3 %
Total global system 6.2 % 5.8 % 6.9 % 3.1 %
 
Company-operated restaurants (all domestic)
Restaurants at beginning of period 40 38 40 38
New restaurant openings 5 2 5 2
Less: Permanent closings - - - -
Temporary (closings)/re-openings, net -   -   -   -  
Restaurants at end of period 45 40 45 40
 
Franchised restaurants (domestic)
Restaurants at beginning of period 1,606 1,560 1,587 1,542
New restaurant openings 37 30 79 71
Less: Permanent closings (6 ) (2 ) (29 ) (27 )
Temporary (closings)/re-openings, net (3 ) (1 ) (3 ) 1  
Restaurants at end of period 1,634 1,587 1,634 1,587
 
Franchised restaurants (international)
Restaurants at beginning of period 414 400 408 397
New restaurant openings 20 20 57 67
Less: Permanent closings (13 ) (9 ) (46 ) (48 )
Temporary (closings)/re-openings, net 4   (3 ) 6   (8 )
Restaurants at end of period 425 408 425 408
 
Total restaurant count at end of period 2,104   2,035   2,104   2,035  
 
 

(1) Same-store sales growth for the fourth quarter of 2012 has been revised from operating results previously reported in the AFC Enterprises Preliminary Fiscal 2012 Operating Results press release issued on February 23, 2013. The revisions are due to the timing of and adjustments to franchisee reported sales for the last period of our fiscal year, primarily from our international franchisees.

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