Arcos Dorados Reports Second Quarter 2012 Financial Results

Arcos Dorados Holdings, Inc. (NYSE: ARCO) (“Arcos Dorados” or the “Company”), Latin America’s largest restaurant chain and the world’s largest McDonald’s franchisee, today reported its unaudited results for the second quarter ended June 30, 2012.

To better discern underlying business trends, this release uses non-GAAP financial measures that segregate year-over-year growth into three categories: (i) currency translation, (ii) special items and (iii) organic growth. (i) Currency translation reflects the impact on growth of the appreciation or depreciation of the local currencies in which we conduct our business against the US dollar (the currency in which our financial statements are prepared). (ii) Special items include the impact of CAD related awards and other events that management does not consider part of the underlying performance of the business. (iii) Organic growth reflects the underlying growth of the business excluding the effect from currency translation and special items. Management believes organic growth better reflects the underlying growth from the ongoing activities of our business and provides improved comparability of results.

Additionally, the Company has modified the presentation of quarterly and accumulated amounts in this release, providing an analysis by geographic division. The information presented is the same as in prior releases.

Second Quarter 2012 Highlights
  • Revenues increased by 1.8% year-over-year to US$ 904.2 million or by 15.5% on an organic basis, as double digit comparable sales growth helped to offset a reduction in reported revenues from the impact of the depreciation of local currencies versus the US dollar
  • Systemwide comparable sales increased by 10.4% year-over-year, driven by average check growth and increased guest counts. The result is in addition to a 14.8% increase in comparable sales in 2Q11
  • 91 net new restaurants opened during the last 12 months, with an accelerated year-over-year pace in quarterly openings, which contributed US$ 40.4 million to revenues
  • Adjusted EBITDA decreased by 0.9% to US$ 67.3 million, due primarily to the 23% depreciation of the Brazilian currency versus the prior year. Excluding currency translation and special items, organic Adjusted EBITDA rose 6.3% year-over-year
  • Net income amounted to US$ 12.1 million, below last year’s net income of US$ 14.2 million, primarily due to the impact of currency depreciation, foreign exchange losses and a higher income tax rate

“Our operations continue to be very strong, led by higher average check growth, increased guest counts and successful marketing activities across all regions. The result is double digit organic revenue growth, which is on target with our stated expectations,” said Woods Staton, Chairman and Chief Executive Officer of Arcos Dorados Holdings, Inc.

“While various economic issues persist in the region, the underlying strength of our enterprise is indisputable and will serve as a driver of ongoing future revenue growth. However, in the near term, given the slower than expected recovery in Brazil as well as expectations for continued currency weakness in that country, we are revising our guidance for full year Adjusted EBITDA growth over 2011 to between 8-10%,” concluded Staton.

Second Quarter 2012 Results

Consolidated

 
     
                                                 

 
Financial Highlights (Million US$)
       

2Q11(a)
     

SpecialItems(b)
     

CurrencyTranslation(c)
     

OrganicGrowth(d)
     

2Q12(a+b+c+d)
     

% AsReported
      % Organic
Total Restaurants 1,767                         1,858            
Sales by Company-operated Restaurants 852.0 (116.5 ) 130.3 865.9 1.6 % 15.3 %
Revenues from franchised restaurants       36.4                 (5.1 )       7.0         38.3         5.2 %       19.1 %
Total Revenues       888.5                 (121.6 )       137.3         904.2         1.8 %       15.5 %
Comparable Sales                                               10.4 %        
Adjusted EBITDA       67.9         6.2       (11.0 )       4.3         67.3         -0.9 %       6.3 %
Adjusted EBITDA Margin 7.6 % 7.4 %
Net Income attributable to AD 14.2 16.7 (3.0 ) (15.8 ) 12.1
No. of shares outstanding ('000)       208,063                                 209,529                  
EPS ($ per share)       0.07                                 0.06                  

( 2Q12 = 2Q11 + Special items + Currency translation + Organic growth)

Arcos Dorados’ second quarter revenues increased by 1.8% to US$ 904.2 million, as organic revenue growth of 15.5% was offset by depreciation of local currencies, which reduced revenue when expressed in US dollars. The increase in organic revenues was driven by systemwide comparable sales growth of 10.4% and the US$ 40.4 million added by the net addition of 91 restaurants during the last 12-month period. The SLAD region and improvement from NOLAD, particularly Mexico, and the Caribbean divisions, contributed to strong revenue growth.

Systemwide comparable sales growth of 10.4% was primarily a reflection of average check growth. Customer visits also showed good positive momentum.

Adjusted EBITDA

Adjusted EBITDA for the second quarter of 2012 was US$ 67.3 million, a 0.9% decrease compared with the same period of 2011. CAD related accrued compensation amounted to a benefit of US$ 6.3 million in 2012, compared with a charge of US$ 1.4 million in 2011. Adjusting for special items (CAD in both periods, along with the CIDE tax charge of US$ 2.7 million and the Venezuela royalty waiver of US$ 1.2 million in 2Q11) and currency impact, organic Adjusted EBITDA increased 6.3%. In the second quarter of 2011, the Company excluded the opening day’s share price variation from its Adjusted EBITDA, treating it as an extraordinary variation.

The Adjusted EBITDA margin as a percentage of total revenues was 7.4% for the quarter, down 20 basis points from the second quarter of 2011. Brazilian cost growth weighed on margins. NOLAD, however, registered margin improvement of 229 basis points as Mexico advanced its turnaround plan and SLAD’s Adjusted EBITDA contribution, as well as margin, improved.

Net income attributable to the Company was US$ 12.1 million in the second quarter of 2012, compared with US$ 14.2 million in the same period of 2011, on an as reported basis. The result reflects higher operating income and lower financing costs offset by higher taxes and foreign exchange losses.

Non-operating Results

Non-operating results deteriorated primarily as a result of a foreign currency net charge of US$ 7.2 million mainly related to the Real currency exposure of intercompany loans.

Non-operating charges were partially offset by lower overall financing costs (including existing derivatives in 2Q11) mainly due to a debt restructuring in July, 2011. The restructuring of the Company’s balance sheet over the past year has helped to reduce the cost of funding and the accounting volatility related to the use of derivatives.

In April 2012, the Company reopened its 2016 BRL Global Bond (originally issued in July 2011) and added R$275 million to support Arcos Dorados’ capital expenditure plan. At the same time, the Company restructured its hedging position to minimize its Real currency exposure related to intercompany loans on the Balance Sheet while also reducing the overall cost of debt.

Income tax expense for the period totaled US$ 7.1 million, resulting in an effective tax rate of 36.8% for the quarter, mainly affected by lower profits in Brazil. This compares to an effective tax rate of 24.8% in the same period a year ago, when the Company reduced certain valuation allowances over deferred taxes. Arcos Dorados’ effective tax rate is impacted by a number of non-deductible items and can vary significantly from quarter to quarter.

The Company reported basic earnings per share (EPS) of US$ 0.06 in the second quarter of 2012, compared to US$ 0.07 in the previous corresponding period. The variation was a result of lower net income and an increased weighted-average number of outstanding shares.

Brazil Division

 
          Financial Highlights (Million US$)
           

2Q11(a)
     

SpecialItems(b)
     

CurrencyTranslation(c)
     

OrganicGrowth(d)
     

2Q12(a+b+c+d)
     

% AsReported
      % Organic
Total Restaurants 625                         677       8.3 %      
Comparable Sales 5.6 %
Revenues           461.9               (95.4 )       53.2         419.7       -9.1 %       11.5 %
Adjusted EBITDA           62.1       (2.7 )       (11.2 )       (2.2 )       46.0       -25.9 %       -3.5 %

Brazil revenues contracted 9.1% due to the depreciation of the Real as compared to the previous year’s second quarter. Excluding currency movements, organic revenue growth was 11.5% in an environment of low economic growth. The result was driven by systemwide comparable sales growth of 5.6% in the quarter and the US$ 26.0 million added by the net addition of 52 restaurants during the last 12-month period.

Adjusted EBITDA declined 25.9% in the second quarter, primarily due to currency translation. As a reference, the average exchange rate was R$1.59 in 2Q2011 and R$1.96 in 2Q2012. The result was also impacted by (i) a modest increase in F&P costs as a percentage of sales, whose impact was partly mitigated by a currency hedge, and (ii) increased payroll costs due to the impact of higher minimum wages.

Organic Adjusted EBITDA contracted 3.5% excluding the CIDE tax on royalty payments (US$2.7 million) that was not recognized until 4Q11. This tax is ongoing and will no longer be considered a special item in 2013 for comparison purposes. Second half sales are expected to be supported by a strong marketing calendar of promotions, new product offerings and, increased economic output and government measures to stimulate growth.

NOLAD

 
              Financial Highlights (Million US$)
               

2Q11(a)
     

SpecialItems(b)
     

CurrencyTranslation(c)
     

OrganicGrowth(d)
     

2Q12(a+b+c+d)
     

% AsReported
      % Organic
Total Restaurants 473                         492       4.0 %      
Comparable Sales 9.2 %
Revenues               89.5               (8.3 )       13.8       95.0       6.2 %       15.4 %
Adjusted EBITDA               4.9               (0.2 )       2.6       7.4       50.7 %       54.0 %

NOLAD’s (Mexico, Panama and Costa Rica) revenues gained by 6.2% or 15.4% on an organic basis, year-over-year. The increase was driven by systemwide comparable sales growth of 9.2%, due primarily to increased transactions, and the US$ 4.2 million added by the net addition of 19 restaurants during the last 12-month period. The Company’s efforts to increase traffic in Mexico have been successful, resulting in high single-digit increase in comparable sales for the division.

The Adjusted EBITDA margin increased 229 bps to 7.7% due primarily to higher sales by company operated restaurants, which provide higher margins. Adjusted EBITDA grew 50.7% in the quarter, or 54.0% on an organic basis, due to increased traffic, better Food & Paper costs and G&A leverage.

SLAD

 
              Financial Highlights (Million US$)
               

2Q11(a)
     

SpecialItems(b)
     

CurrencyTranslation(c)
     

OrganicGrowth(d)
     

2Q12(a+b+c+d)
     

% AsReported
      % Organic
Total Restaurants 525                         553       5.3%      
Comparable Sales 21.9%
Revenues               269.6       -       (15.5)       66.5       320.6       18.9%       24.7%
Adjusted EBITDA               23.6       1.2       (1.7)       6.5       29.6       25.5%       27.4%

SLAD’s (Argentina, Venezuela, Colombia, Chile, Perú, Ecuador, and Uruguay) revenues grew by 18.9% and 24.7% on an organic basis, compared to the second quarter of 2011. The increase reflects a 21.9% increase in systemwide comparable sales and the US$ 9.2 million added by the net addition of 28 restaurants during the last 12-month period. The increase in comparable sales reflected strong average ticket growth in most countries in the division.

Adjusted EBITDA increased as temporary royalty relief in Venezuela (US$1.2 million), together with G&A leverage from strong comparable sales, offset the negative impact of higher payroll costs as a percentage of sales. On an organic basis, Adjusted EBITDA rose 27.4%, while margins also improved.

Caribbean Division

 
          Financial Highlights (Million US$)
           

2Q11(a)
     

SpecialItems(b)
     

CurrencyTranslation(c)
     

OrganicGrowth(d)
     

2Q12(a+b+c+d)
     

% AsReported
      % Organic
Total Restaurants 144                         136       -5.6%      
Comparable Sales 2.8%
Revenues           67.5               (2.5)       3.8       68.8       2.0%       5.6%
Adjusted EBITDA           3.1               (0.2)       0.5       3.3       8.2%       15.4%

The Caribbean division (Puerto Rico, Martinique, Guadeloupe, Aruba, Curaçao, French Guiana, Trinidad & Tobago, US Virgin Islands of St. Thomas and St. Croix) reported revenue growth of 2.0% and 5.6% on an organic basis, compared to the second quarter of 2011. Systemwide comparable sales of 2.8% primarily reflected average check growth, despite weak economic growth in this region.

Adjusted EBITDA grew 8.2% and the EBITDA margin also increased mainly driven by efficiencies in payroll together with higher comparable sales.

New Unit Development
                                         
Total Restaurants (eop) June ‘12       March ‘12       Dec ‘11       Sept. ‘11       June ‘11
Brazil 677       666       662       627       625
NOLAD 492 490 484 473 473
SLAD 553 548 547 533 525
Caribbean 136       139       147       144       144
TOTAL 1,858       1,843       1,840       1,777       1,767
 
LTM Net Openings 91       86       85       64       72

*Considers company-operated and franchised restaurants at period-end

The Company increased the pace of restaurant openings for the twelve months ended June 30, 2012, adding 91 net new restaurants throughout its territories. This compares with 86 net new openings in the twelve month period ended March 31, 2012. The Company maintains a balanced portfolio of restaurants, with Free Standing units representing approximately half of the total restaurant base. The high proportion of Free Standing restaurants, by industry standards, ensures long term brand development and growth potential in key locations. In line with prior quarters, 73% of Arcos Dorados’ restaurants were Company operated, at the close of the quarter.

Balance Sheet & Cash Flow Highlights

Cash and cash equivalents were US$ 245.4 million at June 30, 2012. The Company’s total financial debt (including derivative instruments) was US$ 662.9 million, which included US$ 306.7 million corresponding to the accounting balance of the 2019 US Dollar Notes and R$ 675 million (equivalent to US$ 338.8 million) related to the BRL 2016 Notes issued in July, 2011, and April, 2012. Net debt was US$ 418.9 million and the Net Debt/Adjusted EBITDA ratio was 1.2 at June 30, 2012.

Cash generated from operating activities was US$ 31.1 million in the second quarter of 2012. During the quarter, capital expenditures amounted to US$ 55 million.

The Company maintains a solid debt to equity ratio of 1.0, resulting in a flexible structure for future development.

First Half 2012

For the six months ended June 30, 2012, the Company’s revenues grew by 6.5% (16% on an organic basis) to US$ 1,825.8 million. Additionally, adjusted EBITDA reached US$ 145.3 million, an increase of 3.7% (13.3% on an organic basis) compared to the first half of 2011, which was driven by growth in the SLAD and NOLAD divisions. Operating income was flat, while G&A grew as Arcos Dorados builds out its regional footprint to take advantage of strong population growth and the relatively low penetration of the quick service restaurant category. Year-to-date consolidated net income amounted to US$ 37.5 million, compared with US$ 49.7 million in the first half of last year. The effective tax rate for the first six months of the year was 33.8%. Additionally, total capital expenditure amounted to US$ 95.6 million for the period, compared with US$ 104.3 million in the first half of 2011.

Quarter Highlights & Recent Developments

2016 BRL Global Bond

In April 2012, the Company reopened its 2016 BRL Global Bond (originally issued in July 2011) and added R$275 million to support Arcos Dorados’ capital expenditure plan. At the same time, the Company restructured its hedging position to minimize its Reias currency exposure on the Balance Sheet and reduce the overall cost of debt. The existing coupon-only cross currency swaps (CCS) were settled. Additionally, the Company entered into a new CCS to convert a portion (R$70 million) of its BRL Global Bond to US dollars to maintain approximately 45% of total debt in Reais, in keeping with internal financial policies. Under cash flow hedge accounting rules for this derivative instrument, changes in fair market value will not have an impact on the income statement going forward, except for the adjustments to interest expense and foreign exchange results derived from the hedging relationship.

Guidance 2012

Based on the current economic outlook and marketing plans for 2012, the Company has modified its Adjusted EBITDA growth guidance for the full year to reflect a delay in the expected recovery of consumption within the Brazilian economy. In addition, a weaker than expected currency, primarily in Brazil, is expected to impact the cost of imported inputs. The Company expects to achieve revenue growth within the original guidance provided at the beginning of the year, but now expects Adjusted EBITDA to reach between 8-10% growth over the 2011 result based on constant currency and excluding the CAD related impact on results from stock price variations of 2012. The following growth rates are now expected to be achieved with respect to the previous year:
  • Revenue growth in the range of 15-17%;
  • Adj. EBITDA growth in the range of 8-10%; and an
  • Effective tax rate for the year in the range of 31-33%.

The capital expenditures plan remains the same and includes approximately 130 gross openings. Due to the devaluation in local currencies, the result is a lower capex amount in US dollars for the full year of approximately US$ 300-320 million.

Dividend

On July 20, 2012, the Company paid the second installment of its 2012 Dividends. The total amount paid was US$ 12.5 million or US$ 0.0597 per share on outstanding Class A and Class B shares, to shareholders of record at July 18, 2012. Subsequent payment dates are to be determined by the Board of Directors.

Board Member Appointment

Mr. Alfredo Elias Ayub has been appointed an independent board member of the Company. Mr. Elias, holds an MBA from Harvard Business School, where he graduated as a Baker Scholar, and a Civil Engineering degree from Mexico City’s Universidad Anahuac, where he is a member of the Advisory Council of the School of Engineering. From 1999 until April 2011, Mr. Elias was the Chief Executive Officer of the Comisión Federal de Electricidad, Mexico's biggest state-owned utilities company. Mr. Elias currently serves as member of Dean’s board of advisors for Harvard Business School (2010 to date).

Definitions:

Systemwide comparable sales growth refers to the change, measured in constant currency, in our Company-operated and franchised restaurant sales in one period from a comparable period for restaurants that have been open for thirteen months or longer. While sales by our franchisees are not recorded as revenues by us, we believe the information is important in understanding our financial performance because these sales are the basis on which we calculate and record franchised revenues, and are indicative of the financial health of our franchisee base.

Constant currency basis refers to amounts calculated using the same exchange rate over the periods under comparison to remove the effects of currency fluctuations from this trend analysis.

About Arcos Dorados

Arcos Dorados is the world’s largest McDonald’s franchisee in terms of systemwide sales and number of restaurants, operating the largest quick service restaurant (“QSR”) chain in Latin America and the Caribbean. It has the exclusive right to own, operate and grant franchises of McDonald’s restaurants in 20 Latin American and Caribbean countries and territories, including Argentina, Aruba, Brazil, Chile, Colombia, Costa Rica, Curaçao, Ecuador, French Guyana, Guadeloupe, Martinique, Mexico, Panama, Peru, Puerto Rico, St. Croix, St. Thomas, Trinidad & Tobago, Uruguay and Venezuela. The Company operates or franchises 1,840 McDonald’s-branded restaurants with over 90,000 employees serving approximately 4.3 million customers a day, as of December 2011. Recognized as one of the best companies to work for in Latin America, Arcos Dorados is traded on the New York Stock Exchange (NYSE: ARCO). To learn more about the Company, please visit the Investors section of our website: www.arcosdorados.com

Cautionary Statement on Forward-Looking Statements

This press release contains forward-looking statements. The forward-looking statements contained herein include statements about the Company’s business prospects, its ability to attract customers, its affordable platform, its expectation for revenue generation and its outlook for 2012. These statements are subject to the general risks inherent in Arcos Dorados' business. These expectations may or may not be realized. Some of these expectations may be based upon assumptions or judgments that prove to be incorrect. In addition, Arcos Dorados' business and operations involve numerous risks and uncertainties, many of which are beyond the control of Arcos Dorados, which could result in Arcos Dorados' expectations not being realized or otherwise materially affect the financial condition, results of operations and cash flows of Arcos Dorados. Additional information relating to the uncertainties affecting Arcos Dorados' business is contained in its filings with the Securities and Exchange Commission. The forward-looking statements are made only as of the date hereof, and Arcos Dorados does not undertake any obligation to (and expressly disclaims any obligation to) update any forward-looking statements to reflect events or circumstances after the date such statements were made, or to reflect the occurrence of unanticipated events.

Use of Non-GAAP Financial Measures

In addition to financial measures prepared in accordance with the general accepted accounting principles (GAAP), within this press release and the accompanying tables, we use a financial measure titled ‘Adjusted EBITDA’. We use Adjusted EBITDA to facilitate operating performance comparisons from period to period. Adjusted EBITDA is defined as our operating income plus depreciation and amortization plus/minus the following losses/gains included within other operating expenses, net and within general and administrative expenses in our statement of income: compensation expense related to a special award granted to our chief executive officer, incremental compensation expense related to our 2008 long-term incentive plan, gains from sale of property and equipment, write-off of property and equipment, contract termination losses, and impairment of long-lived assets and goodwill, and stock-based compensation and bonuses incurred in connection with the Company’s initial public listing.
           

Second Quarter 2012 Consolidated Results (Unaudited)

(In thousands of US Dollars, except per share data)
 
For Three-Months ended
June 30,
  2012     2011  
REVENUES
Sales by Company-operated restaurants 865,877 852,042
Revenues from franchised restaurants   38,335     36,447  
Total Revenues   904,212     888,489  
 
OPERATING COSTS AND EXPENSES
Company-operated restaurant expenses:
Food and paper (308,087 ) (302,336 )
Payroll and employee benefits (181,403 ) (167,791 )
Occupancy and other operating expenses (237,936 ) (231,302 )
Royalty fees (42,944 ) (41,484 )
Franchised restaurants - occupancy expenses (13,745 ) (11,973 )
General and administrative expenses (74,962 ) (95,698 )
Other operating (expenses) income, net   (3,862 )   (1,801 )
Total operating costs and expenses   (862,939 )   (852,385 )
Operating income   41,273     36,104  
Net interest expense (13,960 ) (10,415 )
Loss from derivative instruments (163 ) (7,898 )
Foreign currency exchange results (7,224 ) 2,105
Other non-operating expenses, net   (707 )   (745 )
Income before income taxes   19,219     19,151  
Income tax expense   (7,077 )   (4,754 )
Net income   12,142     14,397  
Less: Net income attributable to non-controlling interests   (34 )   (162 )
Net income attributable to Arcos Dorados Holdings Inc.   12,108     14,235  
 
Earnings per share information ($ per share):    
Basic net income per common share attributable to Arcos Dorados Holdings Inc. $ 0.06   $ 0.07  
Weighted-average number of common shares outstanding-Basic   209,529,412     208,063,349  
 
Adjusted EBITDA Reconciliation
Operating income 41,273 36,104
Depreciation and amortization 22,609 15,998
Other operating items excluded from EBITDA computation   3,381     15,767  
Adjusted EBITDA   67,263     67,869  
Adjusted EBITDA Margin as % of total revenues 7.4 % 7.6 %
             

First Half 2012 Consolidated Results (Unaudited)

(In thousands of US Dollars, except per share data)

 
For Six-Months ended
June 30,
  2012     2011  
REVENUES
Sales by Company-operated restaurants 1,748,716 1,643,394
Revenues from franchised restaurants   77,094     71,752  
Total Revenues   1,825,810     1,715,146  
 
OPERATING COSTS AND EXPENSES
Company-operated restaurant expenses:
Food and paper (612,747 ) (580,170 )
Payroll and employee benefits (368,706 ) (327,706 )
Occupancy and other operating expenses (474,935 ) (442,654 )
Royalty fees (86,937 ) (79,955 )
Franchised restaurants - occupancy expenses (27,849 ) (24,393 )
General and administrative expenses (152,591 ) (164,445 )
Other operating (expenses) income, net   (5,556 )   862  
Total operating costs and expenses   (1,729,321 )   (1,618,461 )
Operating income   96,489     96,685  
Net interest expense (25,939 ) (20,199 )
Loss from derivative instruments (1,326 ) (12,225 )
Foreign currency exchange results (11,111 ) 1,864
Other non-operating expenses, net   (1,260 )   (1,183 )
Income before income taxes   56,853     64,942  
Income tax expense   (19,223 )   (14,946 )
Net income   37,630     49,996  
Less: Net income attributable to non-controlling interests   (127 )   (271 )
Net income attributable to Arcos Dorados Holdings Inc.   37,503     49,725  
 
Earnings per share information ($ per share):    
Basic net income per common share attributable to Arcos Dorados Holdings Inc. $ 0.18   $ 0.22  
Weighted-average number of common shares outstanding-Basic   209,529,412     221,408,769  
 
Adjusted EBITDA Reconciliation
Operating income 96,489 96,685
Depreciation and amortization 42,738 31,123
Other operating items excluded from EBITDA computation   6,116     12,386  
Adjusted EBITDA   145,343     140,194  
Adjusted EBITDA Margin as % of total revenues 8.0 % 8.2 %
                                               

Second Quarter and First Half 2012 Results by Division (Unaudited)
(In thousands of U.S. dollars)

 
                       

 
                       
Three-Months ended % Incr. Constant Six-Months ended % Incr. Constant
June 30, / Curr. June 30, / Curr.
2012         2011         (Decr.)       Incr/(Decr) % 2012         2011         (Decr.)       Incr/(Decr) %

Revenues
Brazil 419,743 461,936 -9 % 12 % 869,712 892,063 -3 % 11 %
Caribbean 68,831 67,483 2 % 6 % 135,456 132,056 3 % 5 %
NOLAD 95,043 89,510 6 % 15 % 184,486 171,743 7 % 15 %
SLAD 320,595         269,560         19 %       25 % 636,156         519,284         23 %       27 %
TOTAL 904,212         888,489         2 %       15 % 1,825,810         1,715,146         6 %       16 %
 
 

Operating Income
Brazil 34,158 51,834 -34 % -19 % 84,654 111,629 -24 % -14 %
Caribbean (1,188 ) 184 -746 % -670 % (4,313 ) 538 -902 % -868 %
NOLAD 858 (2,399 ) -136 % -111 % (2,702 ) (6,173 ) 56 % 40 %
SLAD 22,273 17,383 28 % 36 % 48,404 33,710 44 % 51 %
Corporate and Other (14,828 )       (30,898 )       -52 %       -45 % (29,554 )       (43,019 )       31 %       22 %
TOTAL 41,273         36,104         14 %       33 % 96,489         96,685         0 %       9 %
 
 

Adjusted EBITDA
Brazil 45,984 62,074 -26 % -9 % 108,294 128,566 -16 % -5 %
Caribbean 3,326 3,074 8 % 15 % 4,405 6,282 -30 % -25 %
NOLAD 7,361 4,883 51 % 54 % 10,430 7,868 33 % 34 %
SLAD 29,572 23,568 25 % 33 % 61,944 42,933 44 % 51 %
Corporate and Other (18,980 )       (25,730 )       -26 %       -18 % (39,730 )       (45,455 )       13 %       4 %
TOTAL 67,263         67,869         -1 %       14 % 145,343         140,194         4 %       13 %
 
 

Average Exchange Rate per Quarter

Brazil

Mexico

Argentina
2Q12 1.96 13.53 4.45
2Q11               1.59         11.72         4.08  
 

(Local $ per US$1)

 
           

Summarized Consolidated Balance Sheet

 
(In thousands of US Dollars)
 
As of, As of,

June 30, 2012

December 31,
(Unaudited) 2011
 
ASSETS
Current assets
Cash and cash equivalents 245,350 176,301
Accounts and notes receivable, net 80,769 93,862
Other current assets (1) 298,870   318,451  
Total current assets 624,989   588,614  
 
Non-current assets
Property and equipment, net 1,048,931 1,023,180
Net intangible assets and goodwill 57,524 58,419
Deferred income taxes 122,288 142,848
Other non-current assets (2) 65,015   62,345  
Total non-current assets 1,293,758   1,286,792  
Total assets 1,918,747   1,875,406  
 
LIABILITIES AND EQUITY
Current liabilities
Accounts payable 139,369 184,113
Taxes payable (3) 113,348 138,989
Accrued payroll and other liabilities 234,558 183,549
Other current liabilities (4) 39,063 35,030
Provision for contingencies 121 41,959
Financial debt (5) 5,745   5,652  
Total current liabilities 532,204   589,292  
 
Non-current liabilities
Accrued payroll and other liabilities 47,486 52,065
Provision for contingencies 15,209 23,077
Financial debt (5) 658,457 526,693
Deferred income taxes 5,539   4,650  
Total non-current liabilities 726,691   606,485  
Total liabilities 1,258,895   1,195,777  
Equity
Class A shares of common stock 351,654 351,654
Class B shares of common stock 132,915 132,915
Additional paid-in capital 11,757 5,734
Retained earnings 323,932 336,707
Accumulated other comprehensive loss (161,454 ) (148,389 )
Total Arcos Dorados Holdings Inc shareholders’ equity 658,804   678,621  
 
Non-controlling interest in subsidiaries 1,048   1,008  
Total Equity 659,852   679,629  
   
Total liabilities and equity 1,918,747   1,875,406  

(1)
 

Includes "Other receivables", "Inventories", "Prepaid expenses and other current assets", "Derivative instruments", "Deferred income taxes" and "McDonald’s Corporation’s indemnification for contingencies".

(2)

Includes "Miscellaneous", "Collateral deposits" and "McDonald´s Corporation´ indemnification for contingencies".

(3)

Includes "Income taxes payable" and "Other taxes payable".

(4)

Includes "Royalties payable to McDonald´s Corporation" and "Interest payable".

(5)

Includes "Short-term debt", "Long-term debt" and "Derivative instruments".
           
Consolidated Financial Ratios

(In thousands of U.S. dollars, except ratios)
 
As of As of
June 30, 2012 December 31,
(Unaudited) 2011
Cash & cash equivalents 245,350 176,301
Total Financial Debt (i) 662,855 532,345
Net Financial Debt (ii) 417,505 356,044
Total Financial Debt / LTM Adjusted EBITDA ratio 1.9 1.6
Net Financial Debt / LTM Adjusted EBITDA ratio 1.2 1.0
 

(i)
 

Total financial debt includes short-term debt, long-term debt and derivative instruments (including the asset portion of derivatives amounting to $1,347 as a reduction of financial debt)

(ii)

Total financial debt less cash and cash equivalents

Copyright Business Wire 2010

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