þ
|
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
For the fiscal year ended December 29, 2013
|
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
For the transition period from to
|
Minnesota
|
|
58-2016606
|
(State or other jurisdiction of
incorporation or organization)
|
|
(I.R.S. Employer
Identification No.)
|
400 Perimeter Center Terrace, Suite 1000
|
|
30346
|
Atlanta, Georgia
|
|
(Zip Code)
|
(Address of principal executive offices)
|
|
Title of each class
|
|
Name of each exchange on which registered
|
Common stock, $0.01 par value per share
|
|
NASDAQ Global Market
|
Large accelerated filer þ
|
Accelerated filer o
|
Non-accelerated filer o
|
Smaller reporting company o
|
|||
(Do not check if a smaller reporting company)
|
Class
|
Outstanding at January 24, 2014
|
|
Common stock, $0.01 par value per share
|
23,817,393 shares
|
PART I
|
||
Item 1.
|
||
Item 1A.
|
||
Item 1B.
|
||
Item 2.
|
||
Item 3.
|
||
Item 4.
|
||
Item 4.A
|
||
PART II
|
||
Item 5.
|
||
Item 6.
|
||
Item 7.
|
||
Item 7A.
|
||
Item 8.
|
||
Item 9.
|
||
Item 9A.
|
||
Item 9B.
|
||
PART III
|
||
Item 10.
|
||
Item 11.
|
||
Item 12.
|
||
Item 13.
|
||
Item 14.
|
||
PART IV
|
||
Item 15.
|
•
|
Build a Distinctive Brand
|
•
|
Create Memorable Experiences
|
•
|
Grow Restaurant Profits
|
•
|
Accelerate Quality Restaurant Openings
|
•
|
the opening of new restaurants by us or our franchisees;
|
•
|
the closing of restaurants by us or our franchisees;
|
•
|
increases in the number of restaurant properties leased or sub-leased to franchisees under percentage rent arrangements;
|
•
|
volatility of gasoline prices;
|
•
|
increases in labor costs;
|
•
|
increases in the cost of commodities and paper products;
|
•
|
inclement weather patterns; and
|
•
|
economic conditions generally, and in each of the markets in which we, or our franchisees, are located.
|
•
|
the preparation and sale of food;
|
•
|
employee healthcare legislation;
|
•
|
franchising;
|
•
|
building and zoning requirements;
|
•
|
environmental protection;
|
•
|
information security and data protection;
|
•
|
minimum wage, overtime, immigration, unions and other labor issues;
|
•
|
compliance with the Americans with Disabilities Act; and
|
•
|
working and safety conditions.
|
Land and
Buildings Owned
|
Land and/or
Buildings Leased
|
Total
|
||||||
Louisiana
|
5
|
|
21
|
|
26
|
|
||
Tennessee
|
2
|
|
8
|
|
10
|
|
||
Indiana
|
5
|
|
3
|
|
8
|
|
||
Mississippi
|
1
|
|
3
|
|
4
|
|
||
North Carolina
|
—
|
|
3
|
|
3
|
|
||
Arkansas
|
—
|
|
1
|
|
1
|
|
||
South Carolina
|
1
|
|
—
|
|
1
|
|
||
Total
|
14
|
|
39
|
|
53
|
|
Land and
Buildings Owned
|
Land and/or
Buildings Leased
|
Total
|
|||
Texas
|
7
|
21
|
28
|
||
Georgia
|
0
|
16
|
16
|
||
California
|
9
|
4
|
13
|
||
Minnesota
|
9
|
4
|
13
|
||
Tennessee
|
1
|
3
|
4
|
||
Colorado
|
1
|
1
|
2
|
||
Pennsylvania
|
2
|
0
|
2
|
||
Total
|
29
|
49
|
78
|
Name
|
Age
|
Position
|
|||
Cheryl A. Bachelder
|
57
|
|
Chief Executive Officer
|
||
Ralph W. Bower
|
51
|
|
President-U.S.
|
||
H. Melville Hope, III
|
52
|
|
Senior Vice President and Chief Financial Officer
|
||
Richard H. Lynch
|
59
|
|
Chief Brand Experience Officer
|
||
Harold M. Cohen
|
50
|
|
Senior Vice President, General Counsel, Chief Administrative Officer and Corporate Secretary
|
||
Andrew Skehan
|
53
|
|
Chief Operating Officer-International
|
|
2013
|
2012
|
|||||||||||||
(Dollars per share)
|
High
|
Low
|
High
|
Low
|
|||||||||||
First Quarter
|
$
|
36.77
|
|
$
|
25.68
|
|
$
|
17.77
|
|
$
|
13.68
|
|
|||
Second Quarter
|
$
|
38.59
|
|
$
|
31.13
|
|
$
|
24.49
|
|
$
|
15.99
|
|
|||
Third Quarter
|
$
|
44.45
|
|
$
|
35.78
|
|
$
|
26.79
|
|
$
|
20.74
|
|
|||
Fourth Quarter
|
$
|
45.22
|
|
$
|
37.01
|
|
$
|
27.89
|
|
$
|
24.36
|
|
Period
|
Number
of Shares Repurchased
|
Average Price Paid Per Share
|
Total Number
of Shares
Repurchased as Part of a Publicly
Announced Plan
|
Maximum Value of Shares that May Yet Be
Repurchased
Under the Plan
|
||||||||||
Period 11 (10/07/13 to 11/03/13)
|
—
|
|
$
|
—
|
|
—
|
|
$
|
36,476,042
|
|
||||
Period 12 (11/04/13 to 12/01/13)
|
114,577
|
|
$
|
43.18
|
|
114,577
|
|
$
|
31,528,485
|
|
||||
Period 13 (12/02/13 to 12/29/13)
|
—
|
|
$
|
—
|
|
—
|
|
$
|
31,528,485
|
|
||||
Total
|
114,577
|
|
$
|
43.18
|
|
114,577
|
|
$
|
31,528,485
|
|
Comparison of Cumulative Five Year Total Return
|
||||||||||||
Company Name / Index
|
12/28/2008
|
12/27/2009
|
12/26/2010
|
12/25/2011
|
12/30/2012
|
12/29/2013
|
||||||
Popeyes Louisiana Kitchen, Inc.
|
100
|
192
|
338
|
341
|
587
|
869
|
||||||
S&P 500 Index
|
100
|
132
|
150
|
155
|
175
|
235
|
||||||
S&P 1500 Restaurants Index
|
100
|
124
|
167
|
215
|
216
|
281
|
||||||
Former Peer Group Index
|
100
|
116
|
158
|
193
|
219
|
282
|
(In millions, except per share data)
|
2013
|
2012
|
2011
|
2010
|
2009
|
||||||||||||||
Summary of Operations:
|
|||||||||||||||||||
Revenues:(1)
|
|||||||||||||||||||
Sales by company-operated restaurants(2)
|
$
|
78.7
|
|
$
|
64.0
|
|
$
|
54.6
|
|
$
|
52.7
|
|
$
|
57.4
|
|
||||
Franchise royalties and fees(3)
|
121.9
|
|
110.5
|
|
95.0
|
|
89.4
|
|
86.0
|
|
|||||||||
Rent from franchised restaurants(4)
|
5.4
|
|
4.3
|
|
4.2
|
|
4.3
|
|
4.6
|
|
|||||||||
Total revenues
|
206.0
|
|
178.8
|
|
153.8
|
|
146.4
|
|
148.0
|
|
|||||||||
Expenses:
|
|||||||||||||||||||
Restaurant food, beverages and packaging
|
26.1
|
|
21.7
|
|
18.3
|
|
16.8
|
|
18.9
|
|
|||||||||
Restaurant employee, occupancy and other expenses
|
37.9
|
|
31.2
|
|
26.1
|
|
25.8
|
|
29.5
|
|
|||||||||
General and administrative expenses
|
73.4
|
|
67.6
|
|
61.3
|
|
56.4
|
|
56.0
|
|
|||||||||
Occupancy expenses - franchise restaurants
|
3.4
|
|
2.9
|
|
2.7
|
|
2.1
|
|
2.6
|
|
|||||||||
Depreciation and amortization
|
6.7
|
|
4.6
|
|
4.2
|
|
3.9
|
|
4.4
|
|
|||||||||
Other expenses (income), net(5)
|
0.3
|
|
(0.5
|
)
|
0.5
|
|
0.2
|
|
(2.1
|
)
|
|||||||||
Total expenses
|
147.8
|
|
127.5
|
|
113.1
|
|
105.2
|
|
109.3
|
|
|||||||||
Operating profit
|
58.2
|
|
51.3
|
|
40.7
|
|
41.2
|
|
38.7
|
|
|||||||||
Interest expense, net(6)
|
3.7
|
|
3.6
|
|
3.7
|
|
8.0
|
|
8.4
|
|
|||||||||
Income before income taxes
|
54.5
|
|
47.7
|
|
37.0
|
|
33.2
|
|
30.3
|
|
|||||||||
Income tax expense
|
20.4
|
|
17.3
|
|
12.8
|
|
10.3
|
|
11.5
|
|
|||||||||
Net income
|
$
|
34.1
|
|
$
|
30.4
|
|
$
|
24.2
|
|
$
|
22.9
|
|
$
|
18.8
|
|
||||
Earnings per common share, basic
|
$
|
1.44
|
|
$
|
1.27
|
|
$
|
0.99
|
|
$
|
0.91
|
|
$
|
0.74
|
|
||||
Earnings per common share, diluted
|
$
|
1.41
|
|
$
|
1.24
|
|
$
|
0.97
|
|
$
|
0.90
|
|
$
|
0.74
|
|
||||
Weighted average shares outstanding:
|
|||||||||||||||||||
Basic
|
23.6
|
|
23.9
|
|
24.5
|
|
25.3
|
|
25.3
|
|
|||||||||
Diluted
|
24.1
|
|
24.5
|
|
25.0
|
|
25.5
|
|
25.4
|
|
|||||||||
Summary of cash flow data:
|
|||||||||||||||||||
Share repurchases
|
$
|
19.9
|
|
$
|
15.2
|
|
$
|
22.3
|
|
$
|
—
|
|
$
|
—
|
|
||||
Year-end balance sheet data:
|
|||||||||||||||||||
Total assets
|
$
|
200.5
|
|
$
|
172.4
|
|
$
|
135.6
|
|
$
|
123.9
|
|
$
|
116.6
|
|
||||
Total debt
|
67.2
|
|
72.8
|
|
64.0
|
|
66.0
|
|
82.6
|
|
(1)
|
Factors that impact the comparability of revenues for the years presented include:
|
(a)
|
The effects of restaurant openings, closings, unit conversions, franchisee sales and same-store sales (see “Summary of System-Wide Data” later in this Item 6).
|
(b)
|
The Company’s fiscal year ends on the last Sunday in December. The 2012 fiscal year consisted of 53 weeks. All other fiscal years presented consisted of 52 weeks each. The 53rd week in 2012 increased sales by company-operated restaurants by approximately $1.2 million and increased franchise revenues by approximately $1.7 million. The net impact of the 53rd week earnings per share was approximately $0.01 per diluted share.
|
(2)
|
Factors that impact the comparability of sales by Company-operated restaurants for the years presented include:
|
(a)
|
The Company opened nine, five and two company restaurants in 2013, 2012 and 2011, respectively. The impact of new restaurant openings net of one closure in 2013 was an increase in company-operated sales of $14.9 million in 2013 compared to 2012, $5.5 million in 2012 compared to 2011, and $1.3 million in 2011 compared to 2010.
|
(b)
|
In 2009, the Company completed the re-franchising of 16 company-operated restaurants in its Nashville, Tennessee and Atlanta, Georgia markets resulting in a decrease in 2010 revenues of $6.5 million as compared to 2009 (net of franchise royalties earned).
|
(3)
|
Factors that impact franchise royalties and fees include:
|
(a)
|
Franchise revenues are principally composed of royalty payments from franchisees that are are generally 5% of franchise net restaurant sales. While franchise sales are not recorded as revenue by the Company, management believes they are important in understanding the Company’s financial performance because these sales are indicative of the Company’s health, given the Company’s strategic focus on growing its overall business through franchising. Total franchisee sales were $2.358 billion in 2013, $2.189 billion in 2012, $1.932 billion in 2011, $1.811 billion in 2010, and $1.716 billion in 2009.
|
(b)
|
In 2012, the Company completed an acquisition of twenty-seven restaurants in Minnesota and California. The restaurants were in the trade image of another quick service restaurant concept. Twenty-six of the acquired restaurants were converted into the Popeyes Louisiana Kitchen image and leased to Popeyes franchisees to operate under our standard franchise agreement. The remaining restaurant property was sold in 2013. Non-recurring franchise fees associated with twenty-four conversions completed in 2013 were $5.5 million compared to $0.5 million for two conversions completed in 2012.
|
(4)
|
Rent from franchised restaurants are composed of rents and percentage rents associated with properties leased or sub-leased to franchisees. Percentage rents earned from twenty-six restaurant properties converted and franchised in Minnesota and California increased rent from franchised restaurants $1.9 million in 2013 compared to 2012. The assignment of leases to franchisees and lease terminations in 2013 and 2012 reduced rent from franchised restaurants by $0.6 million in 2013 compared to 2012.
|
(5)
|
Factors that impact the comparability of other expenses (income), net for the years presented include:
|
(a)
|
During 2012, other income includes a $0.3 million gain on the sale of real estate to a franchisee and the recognition of $0.5 million in deferred gains related to seven properties formerly leased to a franchisee.
|
(b)
|
During 2011, the Company sold two properties to a franchisee for approximately $0.7 million and recognized a gain of $0.5 million.
|
(c)
|
The Company recognized $0.8 million in expense for the corporate support center relocation in 2011.
|
(d)
|
During 2009, the Company sold ten real estate properties for a gain of approximately $3.6 million.
|
(e)
|
During 2013, 2012, 2011, 2010, and 2009 disposals of fixed assets were approximately $0.4 million, $0.3 million, $0.5 million, $0.7 million, and $0.6 million, respectively.
|
(6)
|
Factors that impact the comparability of interest expense, net for the years presented include:
|
(a)
|
During 2013 we expensed $0.4 million as a component of interest expense, net in connection with the re-financing of our 2013 Credit Facility. See Note 9 to our Consolidated Financial Statements included in this Form 10-K for details on the 2013 Credit Facility.
|
(b)
|
In 2011, interest from term loans decreased $3.2 million compared to 2010 primarily due to lower interest rates from the Credit Facility refinanced in 2010. See Note 9 to our Consolidated Financial Statements included in this Form 10-K for details on the 2010 Credit Facility.
|
(c)
|
During 2010 we expensed $0.6 million as a component of Interest expense, net in connection with the extinguishment of the 2005 Credit Facility term loan.
|
(d)
|
During 2009 we expensed $1.9 million as a component of Interest expense, net in connection with the third amendment and restatement of the 2005 Credit Facility.
|
2013
|
2012
|
2011
|
2010
|
2009
|
||||||||||
Global system-wide sales increase (1)
|
8.2
|
%
|
13.5
|
%
|
6.6
|
%
|
5.1
|
%
|
1.8
|
%
|
||||
Company-operated restaurants same-store sales increase (decrease)
|
2.3
|
%
|
5.3
|
%
|
1.1
|
%
|
4.0
|
%
|
(0.8
|
)%
|
||||
Domestic franchised restaurants same-store sales increase
|
3.6
|
%
|
7.5
|
%
|
3.1
|
%
|
2.5
|
%
|
0.7
|
%
|
||||
Total domestic same-store sales increase
|
3.6
|
%
|
7.5
|
%
|
3.0
|
%
|
2.5
|
%
|
0.6
|
%
|
||||
International franchised restaurants same-store sales increase
|
4.7
|
%
|
2.6
|
%
|
3.3
|
%
|
3.1
|
%
|
1.9
|
%
|
||||
Total global same-store sales increase (2)
|
3.7
|
%
|
6.9
|
%
|
3.1
|
%
|
2.6
|
%
|
0.7
|
%
|
||||
Company-operated restaurants (all domestic)
|
||||||||||||||
Restaurants at beginning of year
|
45
|
|
40
|
|
38
|
|
37
|
|
55
|
|
||||
New restaurant openings
|
9
|
|
5
|
|
2
|
|
1
|
|
—
|
|
||||
Restaurant conversions, net (3)
|
—
|
|
—
|
|
—
|
|
—
|
|
(16
|
)
|
||||
Permanent closings
|
(1
|
)
|
—
|
|
—
|
|
—
|
|
(2
|
)
|
||||
Restaurants at end of year
|
53
|
|
45
|
|
40
|
|
38
|
|
37
|
|
||||
Franchised restaurants (domestic and international)
|
||||||||||||||
Restaurants at beginning of year
|
2,059
|
|
1,995
|
|
1,939
|
|
1,906
|
|
1,867
|
|
||||
New restaurant openings
|
185
|
|
136
|
|
138
|
|
105
|
|
95
|
|
||||
Restaurant conversions, net (3)
|
—
|
|
—
|
|
—
|
|
—
|
|
16
|
|
||||
Permanent closings
|
(67
|
)
|
(75
|
)
|
(75
|
)
|
(67
|
)
|
(79
|
)
|
||||
Temporary (closings)/re-openings, net (4)
|
(5
|
)
|
3
|
|
(7
|
)
|
(5
|
)
|
7
|
|
||||
Restaurants at end of year
|
2,172
|
|
2,059
|
|
1,995
|
|
1,939
|
|
1,906
|
|
||||
Total system restaurants
|
2,225
|
|
2,104
|
|
2,035
|
|
1,977
|
|
1,943
|
|
||||
New franchised restaurant openings
|
||||||||||||||
Domestic
|
115
|
|
79
|
|
71
|
|
44
|
|
39
|
|
||||
International
|
70
|
|
57
|
|
67
|
|
61
|
|
56
|
|
||||
Total new franchised restaurant openings
|
185
|
|
136
|
|
138
|
|
105
|
|
95
|
|
||||
Franchised restaurants
|
||||||||||||||
Domestic
|
1,716
|
|
1,634
|
|
1,587
|
|
1,542
|
|
1,539
|
|
||||
International
|
456
|
|
425
|
|
408
|
|
397
|
|
367
|
|
||||
Restaurants at end of year
|
2,172
|
|
2,059
|
|
1,995
|
|
1,939
|
|
1,906
|
|
(1)
|
Fiscal year 2012 consisted of 53 weeks. All other fiscal years presented consisted of 52 weeks. The 53rd week in 2012 contributed approximately 2.0% to global system-wide sales growth. Excluding the impact of the 53rd week in 2012, global system-wide sales growth in 2013 was approximately 9.9%.
|
(2)
|
New restaurants are included in the computation of same-store sales after they have been open 65 weeks. Unit conversions are included immediately upon conversion. Temporary closings are excluded from same store sales for the period they are closed.
|
(3)
|
Unit conversions include the sale or purchase of Company-operated restaurants to/from a franchisee.
|
(4)
|
Temporary closings are presented net of re-openings. Most temporary closings arise due to the re-imaging or the rebuilding of older restaurants.
|
•
|
Reported net income was $34.1 million, or $1.41 per diluted share, compared to $30.4 million, or $1.24 per diluted share, in 2012. Adjusted earnings per diluted share were $1.43 compared to $1.24 in 2012, an increase of approximately 15%. Adjusted earnings per diluted share is a supplemental non-GAAP measure of performance. See the heading entitled “Management’s Use of Non-GAAP Financial Measures.”
|
•
|
Global same-store sales increased 3.7%, compared to a 6.9% increase last year, for a two-year growth of 10.6%.
|
•
|
Global system-wide sales increased approximately 9.9%, for a two-year growth rate of over 21%, after adjusting for the 53rd week of operations in fiscal 2012.
|
•
|
The Popeyes system opened 194 restaurants, compared to 141 last year, and permanently closed 68 restaurants, resulting in 126 net openings, compared to 66 in 2012. The Popeyes system opened more new restaurants in fiscal 2013 than in any single year in the last 15 years.
|
•
|
Popeyes expanded its strategic investment in company-operated restaurants by adding six new restaurants in our two new markets, Indianapolis and Charlotte, and three in our heritage markets, New Orleans and Memphis. We expect that this strategy will allow the Company to demonstrate its dominant real estate approach and our investment in our employee and guest experiences. In addition, the profitability of our restaurants represents a good long-term investment of capital and fuels our investment in our franchise system as a whole.
|
•
|
Approximately 550 domestic restaurants were remodeled bringing the total to over 1,100 restaurants, or 60% of the domestic system, in the new Popeyes Louisiana Kitchen image.
|
•
|
General and administrative expenses were $73.4 million, at 3.0% of system-wide sales compared to $67.6 million at 3.0% of system-wide sales in 2012.
|
•
|
Operating EBITDA of $65.2 million was 31.7% of total revenues, compared to $55.9 million, at 31.3% of total revenues last year. Operating EBITDA is a supplemental non-GAAP measure of performance. See the heading entitled “Management’s Use of Non-GAAP Financial Measures.”
|
•
|
Free cash flow was $42.0 million, compared to $36.7 million in 2012. Free cash flow is a supplemental non-GAAP measure of performance. See the heading entitled “Management’s Use of Non-GAAP Financial Measures.”
|
•
|
The Company recorded $5.5 million in non-recurring franchise revenues related to the conversions of restaurants acquired in Minnesota and California. These revenues, net of occupancy and other expenses, contributed approximately $0.12 to adjusted earnings per share in 2013.
|
•
|
The Company repurchased approximately 504,000 shares of its common stock for approximately $19.9 million.
|
•
|
Same-store sales growth in the range of 2.0% to 3.0%.
|
•
|
New restaurant openings in the range of 180 to 200 and net restaurant openings in the range of 100 to 130, for a net unit growth rate of approximately 5%. During 2014, the Company expects to open 10 to 15 new company-operated restaurants.
|
•
|
General and administrative expenses are expected to be approximately 3% of system-wide sales maintaining the investment rate for sustainable long term growth.
|
•
|
Capital expenditures for the year are expected to be $30 to $35 million, including approximately $25 million for company-operated restaurant development.
|
•
|
Adjusted earnings per diluted share in the range of $1.57 to $1.62. This guidance reflects a two year average growth of approximately 13% to 14%.
|
•
|
In 2014, the Company plans to repurchase $20 to $30 million in outstanding shares, compared to $19.9 million in 2013.
|
•
|
The Company’s effective income tax rate in 2014 is expected to be approximately 38%, compared to 37.4% in 2013.
|
•
|
The Company’s fiscal year ends on the last Sunday in December. The 2012 fiscal year consisted of 53 weeks. All other fiscal years presented consisted of 52 weeks each. The 53rd week in 2012 increased sales by company-operated restaurants by approximately $1.2 million and increased franchise revenues by approximately $1.7 million. The net impact of the 53rd week earnings per share was approximately $0.01 per diluted share.
|
•
|
During 2013, 2012 and 2011, the Company opened nine, five, and two Company-operated restaurants, respectively.
|
•
|
In 2012, the Company completed an acquisition of twenty-seven restaurants in Minnesota and California. The restaurants were in the trade image of another quick service restaurant concept. Twenty-six of the acquired restaurants were converted into the Popeyes Louisiana Kitchen image and leased to Popeyes franchisees to operate under our standard franchise agreement. The remaining restaurant property was sold in 2013. Non-recurring franchise fees associated with twenty-four conversions completed in 2013 were $5.5 million compared to $0.5 million for two conversions completed in 2012. These franchise revenues, net of non-recurring occupancy and other expenses, contributed approximately $0.12 to adjusted earnings per share in 2013.
|
•
|
$2.3 million increase in international franchise development and marketing support expenses,
|
•
|
$1.0 million increase in domestic new restaurant development expenses,
|
•
|
$0.7 million increase in marketing and menu development expenses,
|
•
|
$0.5 million increase in multi-unit management expenses in new Company-operated restaurant markets in Indianapolis and Charlotte,
|
•
|
$0.5 million increase in stock-based compensation expense, and
|
•
|
$0.8 million increase in leadership development, global supply chain, domestic franchisee restaurant support and other expenses, net.
|
(Dollars in millions)
|
2013
|
2012
|
Fluctuation
|
As a
Percent
|
||||||||||
Franchise operations
|
$
|
54.7
|
|
$
|
47.8
|
|
$
|
6.9
|
|
14.4
|
%
|
|||
Company-operated restaurants
|
10.5
|
|
7.6
|
|
2.9
|
|
38.2
|
%
|
||||||
Operating profit before unallocated expenses
|
65.2
|
|
55.4
|
|
9.8
|
|
17.7
|
%
|
||||||
Less unallocated expenses:
|
||||||||||||||
Depreciation and amortization
|
6.7
|
|
4.6
|
|
2.1
|
|
45.7
|
%
|
||||||
Other expenses (income), net
|
0.3
|
|
(0.5
|
)
|
0.8
|
|
(160.0
|
)%
|
||||||
Total
|
$
|
58.2
|
|
$
|
51.3
|
|
$
|
6.9
|
|
13.5
|
%
|
•
|
$3.1 million increase in short-term and long-term employee incentive costs,
|
•
|
$1.0 million increase in restaurant support and pre-opening costs in new company-operated markets,
|
•
|
$0.9 million increase in domestic new restaurant development and reimage expenses,
|
•
|
$0.5 million in legal fees related to licensing arrangements,
|
•
|
$0.6 million increase in franchisee restaurant support services and new restaurant opening support costs, and
|
•
|
$0.2 million increase in global support center and other general administrative expenses, net.
|
(Dollars in millions)
|
2012
|
2011
|
Fluctuation
|
As a
Percent
|
||||||||||
Franchise operations
|
$
|
47.8
|
|
$
|
37.4
|
|
$
|
10.4
|
|
27.8
|
%
|
|||
Company-operated restaurants
|
7.6
|
|
8.0
|
|
(0.4
|
)
|
(5.0
|
)%
|
||||||
Operating profit before unallocated expenses
|
55.4
|
|
45.4
|
|
10.0
|
|
22.0
|
%
|
||||||
Less unallocated expenses:
|
||||||||||||||
Depreciation and amortization
|
4.6
|
|
4.2
|
|
0.4
|
|
9.5
|
%
|
||||||
Other expenses (income), net
|
(0.5
|
)
|
0.5
|
|
(1.0
|
)
|
(200.0
|
)%
|
||||||
Total
|
$
|
51.3
|
|
$
|
40.7
|
|
$
|
10.6
|
|
26.0
|
%
|
•
|
The Company must maintain a Consolidated Total Leverage Ratio of < 3.50 to 1.0.
|
•
|
The Company must maintain a Consolidated Minimum Fixed Charge Coverage Ratio of > 1.25 to 1.0.
|
•
|
The Company may repurchase and retire its common shares at any time the Total Leverage Ratio is less than 3.00 to 1.0.
|
•
|
The Company may obtain other short-term borrowings of up to $10.0 million and letters of credit up to $20.0 million. Collectively, these other borrowings and letters of credit may not exceed the amount of unused borrowings under the facility.
|
•
|
The Company can request incremental revolving credit commitments up to an additional $125 million.
|
•
|
No principal payments will be due until the maturity date December 18, 2018.
|
•
|
reinvestment in core business activities that promote the Company’s strategic initiatives,
|
•
|
repurchase of shares of our common stock, and
|
•
|
reduction of long-term debt.
|
(Dollars in millions)
|
2013
|
2012
|
2011
|
||||||
Construction of new Company-operated restaurants
|
$
|
15.3
|
|
$
|
7.2
|
|
$
|
1.5
|
|
Acquisition and conversion of restaurants in California and Minnesota
|
13.8
|
|
16.9
|
|
—
|
|
|||
Reimaging activities at Company-operated restaurants
|
2.2
|
|
0.6
|
|
1.5
|
|
|||
Information technology hardware and software
|
0.9
|
|
1.1
|
|
0.2
|
|
|||
Point of sale hardware and software at Company-operated restaurants
|
—
|
|
—
|
|
0.6
|
|
|||
Construction of the new corporate office(1)
|
—
|
|
—
|
|
3.3
|
|
|||
Other capital assets(2)
|
1.1
|
|
1.5
|
|
0.5
|
|
|||
Total capital expenditures
|
$
|
33.3
|
|
$
|
27.3
|
|
$
|
7.6
|
|
(In millions)
|
2014
|
2015
|
2016
|
2017
|
2018
|
There-after
|
Total
|
||||||||||||||
Long-term debt, excluding capital leases(1)
|
$
|
0.3
|
|
$
|
0.3
|
|
$
|
0.3
|
|
$
|
0.3
|
|
$
|
63.4
|
|
$
|
0.4
|
|
$
|
65.0
|
|
Interest on long-term debt, excluding capital leases(1)
|
1.1
|
|
1.1
|
|
1.1
|
|
1.1
|
|
1.0
|
|
—
|
|
5.4
|
|
|||||||
Leases(2)
|
7.3
|
|
7.1
|
|
6.7
|
|
6.5
|
|
5.9
|
|
91.4
|
|
124.9
|
|
|||||||
Copeland formula agreement(3)
|
3.1
|
|
3.1
|
|
3.1
|
|
3.1
|
|
3.1
|
|
30.8
|
|
46.3
|
|
|||||||
Information technology outsourcing(3)
|
1.6
|
|
1.7
|
|
0.4
|
|
—
|
|
—
|
|
—
|
|
3.7
|
|
|||||||
Business process services(3)
|
1.8
|
|
0.6
|
|
—
|
|
—
|
|
—
|
|
—
|
|
2.4
|
|
|||||||
Total(4)
|
$
|
15.2
|
|
$
|
13.9
|
|
$
|
11.6
|
|
$
|
11.0
|
|
$
|
73.4
|
|
$
|
122.6
|
|
$
|
247.7
|
|
(1)
|
For variable rate debt, the Company estimated average outstanding balances for the respective periods and applied interest rates in effect at December 29, 2013. See Note 9 to our Consolidated Financial Statements included in this Form 10-K for information concerning the terms of our 2013 Credit Facility.
|
(2)
|
Of the $125.0 million of minimum lease payments, $118.8 million of those payments relate to operating leases and the remaining $6.1 million of payments relate to capital leases. See Note 10 to our Consolidated Financial Statements included in this Form 10-K.
|
(3)
|
See Note 15 to our Consolidated Financial Statements included in this Form 10-K.
|
(4)
|
We have not included in the contractual obligations table approximately $1.4 million for uncertain tax positions we have taken on a tax return. These liabilities may increase or decrease over time as a result of tax examinations, and given the status of the examinations, we cannot reliably estimate the amount or period of cash settlement, if any, with the respective taxing authorities. These liabilities also include amounts that are temporary in nature and for which we anticipate that over time there will be no net cash outflow.
|
Level 1
|
|
Inputs based upon quoted prices in active markets for identical assets.
|
Level 2
|
|
Inputs other than quoted prices included within Level 1 that are observable for the asset, either directly or indirectly.
|
Level 3
|
|
Inputs that are unobservable for the asset.
|
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.
|
(in millions, except per share data)
|
Fiscal 2013
|
Fiscal 2012
|
||||
Net income
|
$
|
34.1
|
|
$
|
30.4
|
|
Other expense (income), net
|
0.3
|
|
(0.5
|
)
|
||
Interest expense associated with 2010 credit facility retirement
|
0.4
|
|
—
|
|
||
Legal fees related to licensing arrangements
|
—
|
|
0.5
|
|
||
Tax effect
|
(0.3
|
)
|
—
|
|
||
Adjusted net income
|
$
|
34.5
|
|
$
|
30.4
|
|
Adjusted earnings per diluted share
|
$
|
1.43
|
|
$
|
1.24
|
|
Weighted average diluted shares outstanding
|
24.1
|
|
24.5
|
|
(dollars in millions)
|
Fiscal 2013
|
Fiscal 2012
|
||||
Net income
|
$
|
34.1
|
|
$
|
30.4
|
|
Interest expense, net
|
3.7
|
|
3.6
|
|
||
Income tax expense
|
20.4
|
|
17.3
|
|
||
Depreciation and amortization
|
6.7
|
|
4.6
|
|
||
Other expenses (income), net
|
0.3
|
|
(0.5
|
)
|
||
Legal fees related to licensing arrangements
|
—
|
|
0.5
|
|
||
Operating EBITDA
|
$
|
65.2
|
|
$
|
55.9
|
|
Total Revenues
|
$
|
206.0
|
|
$
|
178.8
|
|
Operating EBITDA margin
|
31.7
|
%
|
31.3
|
%
|
(dollars in millions)
|
Fiscal 2013
|
|
Fiscal 2012
|
|
Fiscal 2011
|
|
|||
Sales by company-operated restaurants
|
$
|
78.7
|
|
$
|
64.0
|
|
$
|
54.6
|
|
Restaurant food, beverages and packaging
|
(26.1
|
)
|
(21.7
|
)
|
(18.3
|
)
|
|||
Restaurant employee, occupancy and other expenses
|
(37.9
|
)
|
(31.2
|
)
|
(26.1
|
)
|
|||
Company-operated restaurant operating profit
|
$
|
14.7
|
|
$
|
11.1
|
|
$
|
10.2
|
|
Company-operated restaurant operating profit margin
|
18.7
|
%
|
17.3
|
%
|
18.7
|
%
|
(dollars in millions)
|
Fiscal 2013
|
Fiscal 2012
|
||||
Net income
|
$
|
34.1
|
|
$
|
30.4
|
|
Depreciation and amortization
|
6.7
|
|
4.6
|
|
||
Stock-based compensation expense
|
5.4
|
|
4.9
|
|
||
Maintenance capital expenditures
|
(4.2
|
)
|
(3.2
|
)
|
||
Free cash flow
|
$
|
42.0
|
|
$
|
36.7
|
|
|
Pages
|
|
Report of Independent Registered Public Accounting Firm
|
40
|
|
Consolidated Balance Sheets as of December 29, 2013 and December 30, 2012
|
41
|
|
Consolidated Statements of Operations for Fiscal Years 2013, 2012, and 2011
|
42
|
|
Consolidated Statements of Comprehensive Income for Fiscal Years 2013, 2012, and 2011
|
43
|
|
Consolidated Statements of Changes in Shareholders’ Equity for Fiscal Years 2013, 2012, and 2011
|
44
|
|
Consolidated Statements of Cash Flows for Fiscal Years 2013, 2012, and 2011
|
45
|
|
Notes to the Consolidated Financial Statements
|
46
|
Exhibit
Number
|
Description
|
|
2.1(z)
|
Asset Purchase Agreement among Popeyes Louisiana Kitchen, Inc. (the “Company”) (f/k/a AFC Enterprises, Inc.) and Wagstaff Management Corporation, Wagstaff Minnesota, Inc., Wagstaff Properties Minnesota, LLC, D&D Property Investments, LLC, Wagstaff Properties, LLC, and D&D Food Management, Inc., dated October 11, 2012. (Schedules and exhibits omitted pursuant to Item 601(b)(2) of Regulation S-K. The Company agrees to furnish supplementally a copy of any omitted schedule to the Securities and Exchange Commission upon request.)
|
|
3.1(c)
|
Articles of Incorporation of the Company, as amended, dated June 24, 2002.
|
|
3.1(j)
|
Articles of Amendment of Articles of Incorporation of the Company, dated January 17, 2014.
|
|
3.2(u)
|
Amended and Restated Bylaws of the Company, as amended effective April 11, 2008.
|
|
3.2(j)
|
Amendment No. 2 to Amended and Restated Bylaws of the Company, dated January 17, 2014.
|
|
4.1
|
Form of the Company’s common stock certificate.
|
|
10.1(e)
|
Form of Popeyes Development Agreement, as amended.
|
|
10.2(e)
|
Form of Popeyes Franchise Agreement.
|
|
10.3(a)
|
Formula Agreement dated July 2, 1979 among Alvin C. Copeland, Gilbert E. Copeland, Mary L. Copeland, Catherine Copeland, Russell J. Jones, A. Copeland Enterprises, Inc. and Popeyes Famous Fried Chicken, Inc., as amended to date.
|
|
10.4(a)
|
Supply Agreement dated March 21, 1989 between New Orleans Spice Company, Inc. and Biscuit Investments, Inc.
|
|
10.5(a)
|
Recipe Royalty Agreement dated March 21, 1989 by and among Alvin C. Copeland, New Orleans Spice Company, Inc. and Biscuit Investments, Inc.
|
|
10.6(d)
|
Licensing Agreement dated March 11, 1976 between King Features Syndicate Division of The Hearst Corporation and A. Copeland Enterprises, Inc. as amended through November 29, 2009.
|
|
10.7(a)
|
Assignment and Amendment dated January 1, 1981 between A. Copeland Enterprises, Inc., Popeyes Famous Fried Chicken, Inc. and King Features Syndicate Division of The Hearst Corporation.
|
|
10.8(a)
|
Letter Agreement dated September 17, 1981 between King Features Syndicate Division of The Hearst Corporation, A. Copeland Enterprises, Inc. and Popeyes Famous Fried Chicken, Inc.
|
Exhibit
Number
|
Description
|
|
10.9(a)
|
License Agreement dated December 19, 1985 by and between King Features Syndicate, Inc., The Hearst Corporation, Popeyes, Inc. and A. Copeland Enterprises, Inc.
|
|
10.10(a)
|
Letter Agreement dated July 20, 1987 by and between King Features Syndicate, Division of The Hearst Corporation, Popeyes, Inc. and A. Copeland Enterprises, Inc.
|
|
10.11(m)
|
Amendment dated January 1, 2002 by and between Hearst Holdings, Inc., King Features Syndicate Division and the Company
|
|
10.12(a)
|
1992 Stock Option Plan of the Company, effective as of November 5, 1992, as amended to date.*
|
|
10.13(a)
|
1996 Nonqualified Performance Stock Option Plan - Executive of the Company, effective as of April 11, 1996.*
|
|
10.14(a)
|
1996 Nonqualified Performance Stock Option Plan - General of the Company, effective as of April 11, 1996.*
|
|
10.15(a)
|
1996 Nonqualified Stock Option Plan of AFC Enterprises, Inc. effective as of April 11, 1996.*
|
|
10.16(a)
|
Form of Nonqualified Stock Option Agreement - General between the Company and stock option participants.*
|
|
10.17(a)
|
Form of Nonqualified Stock Option Agreement - Executive between the Company and certain key executives.*
|
|
10.18(a)
|
1996 Employee Stock Bonus Plan - Executive of the Company effective as of April 11, 1996.*
|
|
10.19(a)
|
1996 Employee Stock Bonus Plan - General of the Company effective as of April 11, 1996.*
|
|
10.20(a)
|
Form of Stock Bonus Agreement - Executive between the Company and certain executive officers.*
|
|
10.21(a)
|
Form of Stock Bonus Agreement - General between the Company and certain executive officers.*
|
|
10.22(a)
|
Form of Secured Promissory Note issued by certain members of management.*
|
|
10.23(a)
|
Form of Stock Pledge Agreement between the Company and certain members of management.*
|
|
10.24(a)
|
Settlement Agreement between Alvin C. Copeland, Diversified Foods and Seasonings, Inc., Flavorite Laboratories, Inc. and the Company dated May 29, 1997.
|
|
10.25(a)
|
Indemnification Agreement dated April 11, 1996 by and between the Company and John M. Roth.*
|
|
10.26(a)
|
Indemnification Agreement dated May 1, 1996 by and between the Company and Kelvin J. Pennington.*
|
|
10.27(a)
|
Indemnification Agreement dated April 11, 1996 by and between the Company and Frank J. Belatti.*
|
|
10.28(e)
|
Substitute Nonqualified Stock Option Plan, effective March 17, 1998.*
|
|
10.29(f)
|
Indemnification Agreement dated May 16, 2001 by and between the Company and Victor Arias Jr.*
|
|
10.30(f)
|
Indemnification Agreement dated May 16, 2001 by and between the Company and Carolyn Hogan Byrd.*
|
|
10.31(f)
|
Indemnification Agreement dated August 9, 2001 by and between the Company and R. William Ide, III.*
|
|
10.32(g)
|
AFC Enterprises, Inc. Employee Stock Purchase Plan.*
|
|
10.33(g)
|
AFC Enterprises, Inc. 2002 Incentive Stock Plan.*
|
|
10.34(d)
|
AFC Enterprises, Inc. Annual Executive Bonus Program.*
|
|
10.35(h)
|
Royalty and Supply Agreement dated July 15, 2010 between the Company and Diversified Seasoning, Inc. †
|
|
10.36(o)
|
Indemnity Agreement dated October 14, 2004 by and between the Company and Supply Management Services, Inc.
|
|
10.37(o)
|
Indemnity Agreement dated February 5, 2004 by and between the Company, Cajun Operating Company and Supply Management Services, Inc.
|
Exhibit
Number
|
|
Description
|
10.38(v)
|
Credit Agreement, dated as of December 18, 2013, by and among the Company, the guarantor named therein, the lenders named therein and Wells Fargo Bank, National Association, as Administrative Agent, Swingline Lender and Issuing Lender.
|
|
10.39(i)
|
Fourth Amendment to the 1992 Stock Option Plan of America’s Favorite Chicken Company.
|
|
10.40(i)
|
Fifth Amendment to the America’s Favorite Chicken Company 1996 Nonqualified Performance Stock Option Plan - General.*
|
|
10.41(i)
|
Amendment No. 1 to the America’s Favorite Chicken Company 1996 Nonqualified Stock Option Plan.*
|
|
10.42(i)
|
Second Amendment to the America’s Favorite Chicken Company 1996 Nonqualified Performance Stock Option Plan - Executive.*
|
|
10.43(i)
|
Second Amendment to the AFC Enterprises, Inc. 2002 Incentive Stock Plan.*
|
|
10.44(i)
|
Indemnification Agreement between the Company and Peter Starrett dated December 1, 2000.
|
|
10.45(p)
|
Indemnification Agreement dated November 28, 2006 by and between the Company and John M. Cranor, III.*
|
|
10.46(p)
|
Indemnification Agreement dated November 28, 2006 by and between the Company and Cheryl A. Bachelder.*
|
|
10.47(q)
|
Popeyes Chicken and Biscuits 2006 Bonus Plan.*
|
|
10.48(q)
|
Employment Agreement dated as of March 14, 2007 between the Company and James W. Lyons.*
|
|
10.49(q)
|
Employment Agreement dated as of March 14, 2007 between the Company and Robert Calderin.*
|
|
10.50(r)
|
Non-Qualified Stock Option Certificate for Cheryl Bachelder (time-based vesting).*
|
|
10.51(r)
|
Non-Qualified Stock Option Certificate for Cheryl Bachelder (performance-based vesting).*
|
|
10.52(s)
|
Employment Agreement dated as of October 9, 2007 between the Company and Cheryl A. Bachelder.
|
|
10.53(l)
|
Accelerated Stock Repurchase Agreement by and between the Company and J.P. Morgan Securities Inc., as agent for JPMorgan Chase Bank, National Association, London Branch dated March 12, 2008.
|
|
10.54(t)
|
Amended and Restated Employment Agreement dated as of November 12, 2008 between the Company and Harold M. Cohen.
|
|
10.55(t)
|
Amended and Restated Employment Agreement dated as of November 12, 2008 between the Company and Henry Hope, III.
|
|
10.56(b)
|
Employment Agreement effective as of February 4, 2008 between the Company and Richard Lynch.*
|
|
10.57(w)
|
Employment Agreement effective as of April 20, 2009 between the Company and Ralph Bower.*
|
|
10.58(k)
|
Indemnification Agreement by and between the Company and Krishnan Anand dated November 2, 2010.*
|
|
10.59(x)
|
Employment Agreement by and between the Company and Andrew Skehan, dated August 17, 2011.
|
|
10.60(y)
|
First Amendment to the AFC Enterprises, Inc. 2006 Incentive Stock Plan.
|
|
10.61(aa)
|
Promotion Letter Agreement among the Company and Ralph Bower.*
|
|
10.62(bb)
|
Form of Performance-Based Restricted Stock Unit Grant Certificate.*
|
|
Exhibit
Number
|
|
Description
|
|
10.63(cc)
|
Indemnification Agreement by and between the Company and Martyn R. Redgrave, dated October 9, 2013.*
|
||
10.64(n)
|
Indemnification Agreement by and between the Company and Joel K. Manby, dated September 5, 2013.*
|
||
11.1**
|
Statement regarding computation of per share earnings.
|
||
23.1
|
Consent of PricewaterhouseCoopers LLP
|
||
31.1
|
Certification Pursuant to Rule 13a-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
||
31.2
|
Certification Pursuant to Rule 13a-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
||
32.1
|
Certification of Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
||
32.2
|
Certification of Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
||
101
|
The following financial information for the Company, formatted in XBRL (Extensible Business Reporting Language): (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Operations, (iii) the Condensed Consolidated Statement of Changes in Shareholders’ Equity, (iv) the Condensed Consolidated Statements of Cash Flows, and (v) the Notes to the Unaudited Condensed Consolidated Financial Statements.
|
†
|
Certain portions of this exhibit have been granted confidential treatment.
|
*
|
Management contract, compensatory plan or arrangement required to be filed as an exhibit.
|
**
|
Data required by FASB authoritative guidance for Earnings per Share, is provided in Note 19 to our Consolidated Financial Statements in this Annual Report.
|
(a)
|
Filed as an exhibit to the Registration Statement of the Company on Form S-4/A (Registration No. 333-29731) on July 2, 1997 and incorporated by reference herein.
|
(b)
|
Filed as an exhibit to the Form 10-K of the Company for the fiscal year ended December 28, 2008 on March 11, 2009 and incorporated by reference herein.
|
(c)
|
Filed as an exhibit to the Form 10-Q of the Company for the quarter ended July 14, 2002, on August 14, 2002 and incorporated by reference herein.
|
(d)
|
Filed as an exhibit to the Form 10-Q of the Company for the quarter ended April 18, 2010 on May 26, 2010 and incorporated by reference herein.
|
(e)
|
Filed as an exhibit to the Registration Statement of the Company on Form S-1/A (Registration No. 333-52608) on January 22, 2001 and incorporated by reference herein.
|
(f)
|
Filed as an exhibit to the Registration Statement of the Company on Form S-1 (Registration No. 333-73182) on November 13, 2001 and incorporated by reference herein.
|
(g)
|
Filed as an exhibit to the Proxy Statement and Notice of 2002 Annual Shareholders Meeting of the Company on April 12, 2002 and incorporated by reference herein.
|
(h)
|
Filed as an exhibit to the Form 10-Q of the Company for the quarter ended July 11, 2010 on August 18, 2010 and incorporated by reference herein.
|
(i)
|
Filed as an exhibit to the Form 10-Q of the Company for the quarter ended April 17, 2005, on May 27, 2005, and incorporated by reference herein.
|
(j)
|
Filed as an Exhibit to the Form 8-K of the Company filed on January 21, 2014 and incorporated by reference herein.
|
(k)
|
Filed as an exhibit to the Form 8-K of the Company filed on November 3, 2010 and incorporated by reference herein.
|
(l)
|
Filed as an exhibit to the Form 8-K of the Company filed on March 13, 2008 and incorporated by reference herein
|
(m)
|
Filed as an exhibit to the Form 10-K of the Company for the fiscal year ended December 28, 2003, on March 29, 2004 and incorporated by reference herein.
|
(n)
|
Filed as an exhibit to the Form 8K of the Company filed on September 6, 2013 and incorporated by reference herein.
|
(o)
|
Filed as an exhibit to the Form 10-K of the Company for the fiscal year ended December 26, 2004 on March 28, 2005 and incorporated by reference herein.
|
(p)
|
Filed as an exhibit to the Form 8-K of the Company filed November 29, 2006 and incorporated by reference herein.
|
(q)
|
Filed as an exhibit to the Form 10-K of the Company for the fiscal year ended December 31, 2006 and incorporated by reference herein.
|
(r)
|
Filed as an exhibit to the Form 8-K of the Company filed November 7, 2007 and incorporated by reference herein.
|
(s)
|
Filed as an exhibit to the Form 8-K of the Company filed October 12, 2007 and incorporated by reference herein.
|
(t)
|
Filed as an exhibit to the Form 10-Q of the Company for the quarter ended October 5, 2008 on November 12, 2008 and incorporated by reference herein.
|
(u)
|
Filed an exhibit to the Form 8-K of the Company filed on April 16, 2008 and incorporated by reference herein.
|
(v)
|
Filed as an Exhibit to the Form 8-K of the Company filed on December 20, 2013 and incorporated by reference herein.
|
(w)
|
Filed as an Exhibit to the Form 8-K of the Company filed on April 21, 2009 and incorporated by reference herein.
|
(x)
|
Filed as an Exhibit to the Form 8-K of the Company filed on August 19, 2011 and incorporated by reference herein.
|
(y)
|
Filed as an Exhibit to the Proxy Statement and Notice of 2011 Annual Shareholders Meeting of the Company on April 20, 2011 and incorporated by reference herein.
|
(z)
|
Filed as Exhibit 2.1 to the Form 8-K of the Company filed on October 16, 2012 and incorporated by reference herein.
|
(aa)
|
Filed as Exhibit 10.1 to the Form 10-Q of the Company for the quarter ended April 15, 2012 and incorporated by reference herein.
|
(bb)
|
Filed as Exhibit 10.2 to the Form 10-Q of the Company for the quarter ended April 15, 2012 and incorporated by reference herein.
|
(cc)
|
Filed as an Exhibit to the Form 8-K of the Company filed on October 10, 2013 and incorporated by reference herein.
|
POPEYES LOUISIANA KITCHEN, INC.
|
||
By:
|
|
/s/ CHERYL A. BACHELDER
|
|
Cheryl A. Bachelder
|
|
|
Chief Executive Officer
|
Signature
|
|
Title(s)
|
|
Date
|
/s/ CHERYL A. BACHELDER
|
Chief Executive Officer (Principal
Executive Officer)
|
|||
Cheryl A. Bachelder
|
|
|
February 26, 2014
|
|
/s/ H. MELVILLE HOPE, III
|
Chief Financial Officer (Principal
Financial and Accounting Officer)
|
|||
H. Melville Hope, III
|
|
|
February 26, 2014
|
|
/s/ JOHN M. CRANOR, III
|
Director, Chairman of the Board
|
|||
John M. Cranor, III
|
|
|
February 26, 2014
|
|
/s/ KRISHNAN ANAND
|
Director
|
|||
Krishnan Anand
|
|
|
February 26, 2014
|
|
/s/ VICTOR ARIAS, JR.
|
Director
|
|||
Victor Arias, Jr.
|
|
|
February 26, 2014
|
|
/s/ CAROLYN H. BYRD
|
Director
|
|||
Carolyn H. Byrd
|
|
|
February 26, 2014
|
|
/s/ R. WILLIAM IDE, III
|
Director
|
|||
R. William Ide, III
|
|
|
February 26, 2014
|
|
/s/ JOEL K. MANBY
|
Director
|
|||
Joel K. Manby
|
|
|
February 26, 2014
|
|
/s/ KELVIN J, PENNINGTON
|
Director
|
|||
Kelvin J. Pennington
|
|
|
February 26, 2014
|
|
/s/ MARTYN R. REDGRAVE
|
Director
|
|||
Martyn R. Redgrave
|
|
|
February 26, 2014
|
2013
|
2012
|
||||||
Current assets:
|
|||||||
Cash and cash equivalents
|
$
|
9.6
|
|
$
|
17.0
|
|
|
Accounts and current notes receivable, net
|
8.9
|
|
7.3
|
|
|||
Other current assets
|
9.8
|
|
4.2
|
|
|||
Advertising cooperative assets, restricted
|
27.8
|
|
25.7
|
|
|||
Total current assets
|
56.1
|
|
54.2
|
|
|||
Long-term assets:
|
|||||||
Property and equipment, net
|
77.6
|
|
51.3
|
|
|||
Goodwill
|
11.1
|
|
11.1
|
|
|||
Trademarks and other intangible assets, net
|
53.4
|
|
53.9
|
|
|||
Other long-term assets, net
|
2.3
|
|
1.9
|
|
|||
Total long-term assets
|
144.4
|
|
118.2
|
|
|||
Total assets
|
$
|
200.5
|
|
$
|
172.4
|
|
|
Current liabilities:
|
|||||||
Accounts payable
|
$
|
8.5
|
|
$
|
7.6
|
|
|
Other current liabilities
|
8.1
|
|
5.9
|
|
|||
Current debt maturities
|
0.3
|
|
6.0
|
|
|||
Advertising cooperative liabilities
|
27.8
|
|
25.7
|
|
|||
Total current liabilities
|
44.7
|
|
45.2
|
|
|||
Long-term liabilities:
|
|||||||
Long-term debt
|
66.9
|
|
66.8
|
|
|||
Deferred credits and other long-term liabilities
|
30.1
|
|
26.2
|
|
|||
Total long-term liabilities
|
97.0
|
|
93.0
|
|
|||
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; 23,784,041 and 23,907,428 shares issued and outstanding at the end of fiscal years 2013 and 2012, respectively)
|
0.2
|
|
0.2
|
|
|||
Capital in excess of par value
|
77.9
|
|
87.6
|
|
|||
Accumulated deficit
|
(18.7
|
)
|
(52.8
|
)
|
|||
Accumulated other comprehensive loss
|
(0.6
|
)
|
(0.8
|
)
|
|||
Total shareholders’ equity
|
58.8
|
|
34.2
|
|
|||
Total liabilities and shareholders’ equity
|
$
|
200.5
|
|
$
|
172.4
|
|
2013
|
2012
|
2011
|
|||||||||
Revenues:
|
|||||||||||
Sales by company-operated restaurants
|
$
|
78.7
|
|
$
|
64.0
|
|
$
|
54.6
|
|
||
Franchise royalties and fees
|
121.9
|
|
110.5
|
|
95.0
|
|
|||||
Rent from franchised restaurants
|
5.4
|
|
4.3
|
|
4.2
|
|
|||||
Total revenues
|
206.0
|
|
178.8
|
|
153.8
|
|
|||||
Expenses:
|
|||||||||||
Restaurant food, beverages and packaging
|
26.1
|
|
21.7
|
|
18.3
|
|
|||||
Restaurant employee, occupancy and other expenses
|
37.9
|
|
31.2
|
|
26.1
|
|
|||||
General and administrative expenses
|
73.4
|
|
67.6
|
|
61.3
|
|
|||||
Occupancy expenses - franchise restaurants
|
3.4
|
|
2.9
|
|
2.7
|
|
|||||
Depreciation and amortization
|
6.7
|
|
4.6
|
|
4.2
|
|
|||||
Other expenses (income), net
|
0.3
|
|
(0.5
|
)
|
0.5
|
|
|||||
Total expenses
|
147.8
|
|
127.5
|
|
113.1
|
|
|||||
Operating profit
|
58.2
|
|
51.3
|
|
40.7
|
|
|||||
Interest expense, net
|
3.7
|
|
3.6
|
|
3.7
|
|
|||||
Income before income taxes
|
54.5
|
|
47.7
|
|
37.0
|
|
|||||
Income tax expense
|
20.4
|
|
17.3
|
|
12.8
|
|
|||||
Net income
|
$
|
34.1
|
|
$
|
30.4
|
|
$
|
24.2
|
|
||
Earnings per common share, basic:
|
$
|
1.44
|
|
$
|
1.27
|
|
$
|
0.99
|
|
||
Earnings per common share, diluted:
|
$
|
1.41
|
|
$
|
1.24
|
|
$
|
0.97
|
|
||
Weighted-average shares outstanding:
|
|||||||||||
Basic
|
23.6
|
|
23.9
|
|
24.5
|
|
|||||
Diluted
|
24.1
|
|
24.5
|
|
25.0
|
|
2013
|
2012
|
2011
|
|||||||||
Net income
|
$
|
34.1
|
|
$
|
30.4
|
|
$
|
24.2
|
|
||
Other comprehensive income
|
|||||||||||
Net change in fair value of cash flow hedge
|
0.4
|
|
—
|
|
(1.3
|
)
|
|||||
Reclassification adjustments for derivative losses included in earnings
|
—
|
|
—
|
|
0.1
|
|
|||||
Other comprehensive income (loss), before income tax
|
0.4
|
|
—
|
|
(1.2
|
)
|
|||||
Income tax on other comprehensive income
|
(0.2
|
)
|
—
|
|
0.5
|
|
|||||
Other comprehensive income (loss), net of income taxes
|
0.2
|
|
—
|
|
(0.7
|
)
|
|||||
Comprehensive income
|
$
|
34.3
|
|
$
|
30.4
|
|
$
|
23.5
|
|
|
Common Stock
|
Capital in
Excess of
Par Value
|
Accumulated
Deficit
|
Accumulated
Other
Comprehensive
(Loss)
|
Total
|
|||||||||||||||||
|
Number of
Shares
|
Amount
|
||||||||||||||||||||
Balance at December 26, 2010
|
25,685,705
|
|
$
|
0.3
|
|
$
|
116.4
|
|
$
|
(107.4
|
)
|
$
|
(0.1
|
)
|
$
|
9.2
|
|
|||||
Net income
|
—
|
|
—
|
|
—
|
|
24.2
|
|
—
|
|
24.2
|
|
||||||||||
Other comprehensive income, net of tax
|
—
|
|
—
|
|
—
|
|
—
|
|
(0.7
|
)
|
(0.7
|
)
|
||||||||||
Repurchases and retirement of shares
|
(1,465,436
|
)
|
(0.1
|
)
|
(22.2
|
)
|
—
|
|
—
|
|
(22.3
|
)
|
||||||||||
Excess tax benefit from stock-based compensation
|
—
|
|
—
|
|
0.1
|
|
—
|
|
—
|
|
0.1
|
|
||||||||||
Issuance of common stock under stock option plans
|
59,407
|
|
—
|
|
0.6
|
|
—
|
|
—
|
|
0.6
|
|
||||||||||
Issuance of restricted stock awards, net of forfeitures
|
103,598
|
|
—
|
|
(0.2
|
)
|
—
|
|
—
|
|
(0.2
|
)
|
||||||||||
Stock-based compensation expense
|
—
|
|
—
|
|
2.9
|
|
—
|
|
—
|
|
2.9
|
|
||||||||||
Balance at December 25, 2011
|
24,383,274
|
|
$
|
0.2
|
|
$
|
97.6
|
|
$
|
(83.2
|
)
|
$
|
(0.8
|
)
|
$
|
13.8
|
|
|||||
Net income
|
—
|
|
—
|
|
—
|
|
30.4
|
|
—
|
|
30.4
|
|
||||||||||
Other comprehensive income, net of tax
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
||||||||||
Repurchases and retirement of shares
|
(741,228
|
)
|
—
|
|
(15.2
|
)
|
—
|
|
—
|
|
(15.2
|
)
|
||||||||||
Excess tax benefit from stock-based compensation
|
—
|
|
—
|
|
0.4
|
|
—
|
|
—
|
|
0.4
|
|
||||||||||
Issuance of common stock under stock option plans
|
108,935
|
|
—
|
|
1.3
|
|
—
|
|
—
|
|
1.3
|
|
||||||||||
Issuance of restricted stock awards, net of forfeitures
|
156,447
|
|
—
|
|
(1.4
|
)
|
—
|
|
—
|
|
(1.4
|
)
|
||||||||||
Stock-based compensation expense
|
—
|
|
—
|
|
4.9
|
|
—
|
|
—
|
|
4.9
|
|
||||||||||
Balance at December 30, 2012
|
23,907,428
|
|
$
|
0.2
|
|
$
|
87.6
|
|
$
|
(52.8
|
)
|
$
|
(0.8
|
)
|
$
|
34.2
|
|
|||||
Net income
|
—
|
|
—
|
|
—
|
|
34.1
|
|
—
|
|
34.1
|
|
||||||||||
Other comprehensive income, net of tax
|
—
|
|
—
|
|
—
|
|
—
|
|
0.2
|
|
0.2
|
|
||||||||||
Repurchases and retirement of shares
|
(504,295
|
)
|
—
|
|
(19.9
|
)
|
—
|
|
—
|
|
(19.9
|
)
|
||||||||||
Excess tax benefit from stock-based compensation
|
—
|
|
—
|
|
3.4
|
|
—
|
|
—
|
|
3.4
|
|
||||||||||
Issuance of common stock under stock option plans
|
322,804
|
|
—
|
|
3.6
|
|
—
|
|
—
|
|
3.6
|
|
||||||||||
Issuance of restricted stock awards, net of forfeitures
|
58,104
|
|
—
|
|
(2.2
|
)
|
—
|
|
—
|
|
(2.2
|
)
|
||||||||||
Stock-based compensation expense
|
—
|
|
—
|
|
5.4
|
|
—
|
|
—
|
|
5.4
|
|
||||||||||
Balance at December 29, 2013
|
23,784,041
|
|
$
|
0.2
|
|
$
|
77.9
|
|
$
|
(18.7
|
)
|
$
|
(0.6
|
)
|
$
|
58.8
|
|
2013
|
2012
|
2011
|
|||||||||
Cash flows provided by (used in) operating activities:
|
|||||||||||
Net income
|
$
|
34.1
|
|
$
|
30.4
|
|
$
|
24.2
|
|
||
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
|
|||||||||||
Depreciation and amortization
|
6.7
|
|
4.6
|
|
4.2
|
|
|||||
Disposals of property and equipment
|
0.4
|
|
0.3
|
|
0.5
|
|
|||||
Net gain on sale of assets
|
(0.1
|
)
|
(0.9
|
)
|
(0.8
|
)
|
|||||
Deferred income taxes
|
4.5
|
|
2.2
|
|
1.3
|
|
|||||
Non-cash interest expense, net
|
0.8
|
|
0.4
|
|
0.5
|
|
|||||
Provision for credit recoveries
|
(0.7
|
)
|
(0.1
|
)
|
(0.3
|
)
|
|||||
Excess tax benefit from share-based payment arrangements
|
(3.4
|
)
|
(0.4
|
)
|
(0.1
|
)
|
|||||
Stock-based compensation expense
|
5.4
|
|
4.9
|
|
2.9
|
|
|||||
Change in operating assets and liabilities:
|
|||||||||||
Accounts receivable
|
(1.6
|
)
|
(0.2
|
)
|
(1.4
|
)
|
|||||
Other operating assets
|
(2.3
|
)
|
0.8
|
|
(0.2
|
)
|
|||||
Accounts payable and other operating liabilities
|
1.0
|
|
(1.8
|
)
|
1.3
|
|
|||||
Net cash provided by operating activities
|
44.8
|
|
40.2
|
|
32.1
|
|
|||||
Cash flows provided by (used in) investing activities:
|
|||||||||||
Capital expenditures
|
(33.3
|
)
|
(27.3
|
)
|
(7.6
|
)
|
|||||
Proceeds from dispositions of property and equipment
|
0.6
|
|
0.4
|
|
0.7
|
|
|||||
Capitalized interest
|
(0.2
|
)
|
—
|
|
—
|
|
|||||
Investment in trademark
|
—
|
|
(8.0
|
)
|
—
|
|
|||||
Proceeds from notes receivable and other investing activities
|
—
|
|
—
|
|
0.3
|
|
|||||
Net cash used in investing activities
|
(32.9
|
)
|
(34.9
|
)
|
(6.6
|
)
|
|||||
Cash flows provided by (used in) financing activities:
|
|||||||||||
Principal payments — 2010 credit facility (revolver)
|
(37.0
|
)
|
—
|
|
—
|
|
|||||
Principal payments — 2010 credit facility (term loan)
|
(31.3
|
)
|
(5.0
|
)
|
(3.8
|
)
|
|||||
Borrowings under 2013 credit facility (revolver)
|
63.0
|
|
—
|
|
—
|
|
|||||
Borrowings under 2010 revolving credit facility
|
—
|
|
13.0
|
|
2.0
|
|
|||||
Excess tax benefits from share-based payment arrangements
|
3.4
|
|
0.4
|
|
0.1
|
|
|||||
Share repurchases
|
(19.9
|
)
|
(15.2
|
)
|
(22.3
|
)
|
|||||
Proceeds from exercise of employee stock options
|
3.6
|
|
1.3
|
|
0.6
|
|
|||||
Debt issuance costs
|
(0.7
|
)
|
—
|
|
—
|
|
|||||
Other financing activities, net
|
(0.4
|
)
|
(0.4
|
)
|
(0.4
|
)
|
|||||
Net cash used in financing activities
|
(19.3
|
)
|
(5.9
|
)
|
(23.8
|
)
|
|||||
Net increase (decrease) in cash and cash equivalents
|
(7.4
|
)
|
(0.6
|
)
|
1.7
|
|
|||||
Cash and cash equivalents at beginning of year
|
17.0
|
|
17.6
|
|
15.9
|
|
|||||
Cash and cash equivalents at end of year
|
$
|
9.6
|
|
$
|
17.0
|
|
$
|
17.6
|
|
(in millions)
|
2013
|
2012
|
2011
|
||||||||
Interest paid
|
$
|
3.1
|
|
$
|
2.9
|
|
$
|
2.4
|
|
||
Corporate office lease tenant improvement allowances and incentives
|
—
|
|
—
|
|
(3.0
|
)
|
|||||
Property acquired under capital lease obligation
|
—
|
|
1.0
|
|
—
|
|
|||||
Income taxes paid, net
|
16.2
|
|
12.5
|
|
10.6
|
|
(in millions)
|
2013
|
2012
|
2011
|
||||||||
Balance, beginning of year
|
$
|
0.2
|
|
$
|
0.6
|
|
$
|
1.2
|
|
||
Provisions for credit (recoveries) losses
|
—
|
|
(0.1
|
)
|
(0.3
|
)
|
|||||
Write-offs
|
(0.1
|
)
|
(0.3
|
)
|
(0.3
|
)
|
|||||
Balance, end of year
|
$
|
0.1
|
|
$
|
0.2
|
|
$
|
0.6
|
|
Level 1
|
Inputs based upon quoted prices in active markets for identical assets.
|
|
Level 2
|
Inputs other than quoted prices included within Level 1 that are observable for the asset, either directly or indirectly.
|
|
Level 3
|
Inputs that are unobservable for the asset.
|
(in millions)
|
2013
|
2012
|
|||||
Deferred tax assets
|
$
|
—
|
|
$
|
0.3
|
|
|
Prepaid income taxes
|
5.2
|
|
—
|
|
|||
Prepaid expenses and other current assets
|
4.6
|
|
3.9
|
|
|||
|
$
|
9.8
|
|
$
|
4.2
|
|
(in millions)
|
2013
|
|
2012
|
|
|||
Land
|
$
|
16.0
|
|
$
|
12.1
|
|
|
Buildings and improvements
|
60.8
|
|
43.2
|
|
|||
Equipment
|
33.3
|
|
23.3
|
|
|||
Properties held for sale and other
|
0.1
|
|
0.7
|
|
|||
110.2
|
|
79.3
|
|
||||
Less accumulated depreciation and amortization
|
(32.6
|
)
|
(28.0
|
)
|
|||
|
$
|
77.6
|
|
$
|
51.3
|
|
Land
|
$
|
7.5
|
|
Building and improvements
|
6.5
|
|
|
Properties held for sale and other
|
0.6
|
|
|
Total cost
|
$
|
14.6
|
|
(in millions)
|
2013
|
2012
|
|||||
Non-amortizable intangible assets:
|
|||||||
Trademarks
|
$
|
50.0
|
|
$
|
50.0
|
|
|
Other
|
0.6
|
|
0.6
|
|
|||
50.6
|
|
50.6
|
|
||||
Amortizable intangible assets:
|
|||||||
Re-acquired franchise rights
|
7.1
|
|
7.1
|
|
|||
Accumulated amortization
|
(4.3
|
)
|
(3.8
|
)
|
|||
|
2.8
|
|
3.3
|
|
|||
|
$
|
53.4
|
|
$
|
53.9
|
|
(in millions)
|
2013
|
2012
|
|||||
Accrued wages, bonuses and severances
|
$
|
6.0
|
|
$
|
2.6
|
|
|
Other
|
2.1
|
|
3.3
|
|
|||
|
$
|
8.1
|
|
$
|
5.9
|
|
Quoted Prices in Active Markets for Identical Asset or Liability (Level 1) |
Significant Other Observable Inputs (Level 2) |
Significant Unobservable Inputs (Level 3) |
Carrying Value |
||||||||||||
December 29, 2013
|
|||||||||||||||
Financial Assets
|
|||||||||||||||
Cash equivalents
|
$
|
10.6
|
|
$
|
—
|
|
$
|
—
|
|
$
|
10.6
|
|
|||
Restricted cash (advertising cooperative assets)
|
4.3
|
|
—
|
|
—
|
|
4.3
|
|
|||||||
Total assets at fair value
|
$
|
14.9
|
|
$
|
—
|
|
$
|
—
|
|
$
|
14.9
|
|
|||
Financial Liabilities
|
|||||||||||||||
Long term debt and other borrowings
|
$
|
—
|
|
72.2
|
|
$
|
—
|
|
67.2
|
|
|||||
Total liabilities at fair value
|
$
|
—
|
|
$
|
72.2
|
|
$
|
—
|
|
$
|
67.2
|
|
Quoted Prices in Active Markets for Identical Asset or Liability (Level 1) |
Significant Other Observable Inputs (Level 2) |
Significant Unobservable Inputs (Level 3) |
Carrying Value |
||||||||||||
December 30, 2012
|
|||||||||||||||
Financial Assets
|
|||||||||||||||
Cash equivalents
|
$
|
16.3
|
|
$
|
—
|
|
$
|
—
|
|
$
|
16.3
|
|
|||
Restricted cash (advertising cooperative assets)
|
4.3
|
|
—
|
|
—
|
|
4.3
|
|
|||||||
Total assets at fair value
|
$
|
20.6
|
|
$
|
—
|
|
$
|
—
|
|
$
|
20.6
|
|
|||
Financial Liabilities
|
|||||||||||||||
Interest rate swap agreement (Note 9)
|
$
|
—
|
|
$
|
1.3
|
|
$
|
—
|
|
$
|
1.3
|
|
|||
Long term debt and other borrowings
|
$
|
—
|
|
74.4
|
|
$
|
—
|
|
72.8
|
|
|||||
Total liabilities at fair value
|
$
|
—
|
|
$
|
75.7
|
|
$
|
—
|
|
$
|
74.1
|
|
(in millions)
|
2013
|
2012
|
|||||
2013 Credit Facility:
|
|||||||
Revolving credit facility
|
$
|
63.0
|
|
$
|
—
|
|
|
2010 Credit Facility:
|
|||||||
Revolving credit facility
|
—
|
|
37.0
|
|
|||
Term loan
|
—
|
|
31.3
|
|
|||
Capital lease obligations
|
2.2
|
|
2.3
|
|
|||
Other notes
|
2.0
|
|
2.2
|
|
|||
67.2
|
|
72.8
|
|
||||
Less current portion
|
(0.3
|
)
|
(6.0
|
)
|
|||
|
$
|
66.9
|
|
$
|
66.8
|
|
(in millions)
|
|
||
2014
|
$
|
0.3
|
|
2015
|
0.3
|
|
|
2016
|
0.3
|
|
|
2017
|
0.3
|
|
|
2018
|
63.4
|
|
|
Thereafter
|
0.4
|
|
|
|
$
|
65.0
|
|
Derivative Liabilities
|
|||||||||
(In millions)
|
Balance Sheet Location
|
12/29/2013
|
12/30/2012
|
||||||
Interest rate swap agreements
|
Deferred credits and other long-term liabilities
|
$
|
—
|
|
$
|
1.3
|
|
|
Amount of Gain (Loss) recognized into AOCI |
Amount of Gain (Loss) Reclassified from AOCI to Income |
|||||||||||||||||||||||
(In millions)
|
2013
|
2012
|
2011
|
|
2013
|
2012
|
2011
|
||||||||||||||||||
Interest rate swap agreements, net of tax |
$
|
0.2
|
|
$
|
—
|
|
$
|
(0.8
|
)
|
Interest expense, net
|
$
|
—
|
|
$
|
—
|
|
$
|
(0.1
|
)
|
||||||
|
$
|
0.2
|
|
$
|
—
|
|
$
|
(0.8
|
)
|
|
$
|
—
|
|
$
|
—
|
|
$
|
(0.1
|
)
|
(in millions)
|
Capital Leases |
Operating Leases |
|||||
2014
|
$
|
0.3
|
|
$
|
7.0
|
|
|
2015
|
0.3
|
|
6.8
|
|
|||
2016
|
0.2
|
|
6.5
|
|
|||
2017
|
0.2
|
|
6.3
|
|
|||
2018
|
0.2
|
|
5.7
|
|
|||
Thereafter
|
4.9
|
|
86.5
|
|
|||
Future minimum lease payments
|
6.1
|
|
118.8
|
|
|||
Less amounts representing interest
|
3.9
|
|
—
|
|
|||
|
$
|
2.2
|
|
$
|
118.8
|
|
(in millions)
|
2013
|
2012
|
|||||
Deferred franchise revenues
|
$
|
3.5
|
|
$
|
2.4
|
|
|
Deferred gains on unit conversions
|
1.0
|
|
1.1
|
|
|||
Deferred rentals
|
7.4
|
|
7.0
|
|
|||
Above-market rent obligations
|
2.6
|
|
2.7
|
|
|||
Deferred income taxes
|
13.6
|
|
9.3
|
|
|||
Other long-term liabilities
|
2.0
|
|
3.7
|
|
|||
|
$
|
30.1
|
|
$
|
26.2
|
|
(shares in thousands)
|
Shares
|
Weighted Average Exercise Price |
Weighted Average Remaining Contractual Term (years) |
Aggregate Intrinsic Value (millions) |
||||||||
Stock options:
|
||||||||||||
Outstanding at beginning of year
|
808
|
|
$
|
12.16
|
|
|||||||
Granted options
|
66
|
|
34.80
|
|
||||||||
Exercised options
|
(290
|
)
|
12.51
|
|
||||||||
Canceled and expired options
|
(18
|
)
|
12.75
|
|
|
|
||||||
Outstanding at end of year
|
566
|
|
$
|
14.58
|
|
3.5
|
$
|
13.2
|
|
|||
Exercisable at end of year
|
399
|
|
$
|
10.89
|
|
2.7
|
$
|
10.8
|
|
|||
Shares available for future grants under the plans at end of year
|
1,201
|
|
|
|
|
2013
|
2012
|
2011
|
|||
Risk-free interest rate
|
0.7%
|
1.0%
|
2.9%
|
||
Expected dividend yield
|
—%
|
—%
|
—%
|
||
Expected term (in years)
|
4.5
|
4.5
|
6
|
||
Expected volatility
|
53.0%
|
55.3%
|
56.8%
|
(shares in thousands)
|
Shares
|
Weighted Average Grant Date Fair Value |
||||
Unvested stock options outstanding at beginning of period
|
236
|
|
$
|
7.15
|
|
|
Granted
|
66
|
|
15.11
|
|
||
Vested
|
(114
|
)
|
6.89
|
|
||
Expired
|
(15
|
)
|
3.18
|
|
||
Unvested stock options outstanding at end of period
|
173
|
|
$
|
10.68
|
|
(share awards in thousands)
|
Shares
|
Weighted
Average
Grant
Date Fair
Value
|
||||
Unvested restricted share awards:
|
||||||
Outstanding beginning of year
|
320
|
|
$
|
15.77
|
|
|
Granted
|
122
|
|
$
|
31.77
|
|
|
Vested
|
(161
|
)
|
$
|
14.43
|
|
|
Cancelled
|
(6
|
)
|
$
|
24.84
|
|
|
Outstanding end of year
|
275
|
|
$
|
23.44
|
|
(share awards in thousands)
|
Units
|
Weighted
Average
Grant
Date Fair
Value
|
||||
Unvested restricted stock units:
|
||||||
Outstanding beginning of year
|
210
|
|
$
|
12.44
|
|
|
Granted
|
18
|
|
34.42
|
|
||
Vested
|
(32
|
)
|
11.98
|
|
||
Outstanding end of year
|
196
|
|
$
|
14.53
|
|
(in millions)
|
2013
|
2012
|
2011
|
||||||||
Disposals of property and equipment
|
$
|
0.4
|
|
$
|
0.3
|
|
$
|
0.5
|
|
||
Net gain on sale of assets
|
(0.1
|
)
|
(0.9
|
)
|
(0.8
|
)
|
|||||
Corporate support center relocation
|
—
|
|
—
|
|
0.8
|
|
|||||
Other
|
—
|
|
0.1
|
|
—
|
|
|||||
|
$
|
0.3
|
|
$
|
(0.5
|
)
|
$
|
0.5
|
|
(in millions)
|
2013
|
2012
|
2011
|
||||||||
Interest on debt
|
$
|
2.4
|
|
$
|
2.8
|
|
$
|
2.8
|
|
||
Amortization and write-offs of debt issuance costs
|
0.8
|
|
0.4
|
|
0.4
|
|
|||||
Other debt related charges
|
0.6
|
|
0.5
|
|
0.6
|
|
|||||
Interest income
|
(0.1
|
)
|
(0.1
|
)
|
(0.1
|
)
|
|||||
|
$
|
3.7
|
|
$
|
3.6
|
|
$
|
3.7
|
|
(in millions)
|
2013
|
2012
|
2011
|
||||||||
Income taxes in the statements of operations, net
|
$
|
20.4
|
|
$
|
17.3
|
|
$
|
12.8
|
|
||
Income taxes charged (credited) to statements of shareholders’ equity (deficit):
|
|||||||||||
Compensation expense for tax purposes in excess of amounts recognized for financial reporting purposes
|
(3.4
|
)
|
(0.4
|
)
|
(0.1
|
)
|
|||||
Other comprehensive income
|
0.2
|
|
—
|
|
(0.5
|
)
|
|||||
|
$
|
17.2
|
|
$
|
16.9
|
|
$
|
12.2
|
|
(in millions)
|
2013
|
2012
|
2011
|
||||||||
United States
|
$
|
49.5
|
|
$
|
41.3
|
|
$
|
31.4
|
|
||
Foreign
|
5.0
|
|
6.4
|
|
5.6
|
|
|||||
|
$
|
54.5
|
|
$
|
47.7
|
|
$
|
37.0
|
|
(in millions)
|
2013
|
2012
|
2011
|
||||||||
Current income tax expense:
|
|||||||||||
Federal
|
$
|
12.8
|
|
$
|
12.2
|
|
$
|
9.2
|
|
||
Foreign
|
1.4
|
|
1.3
|
|
1.1
|
|
|||||
State
|
1.7
|
|
1.6
|
|
1.2
|
|
|||||
15.9
|
|
15.1
|
|
11.5
|
|
||||||
Deferred income tax expense:
|
|||||||||||
Federal
|
4.1
|
|
2.0
|
|
1.2
|
|
|||||
State
|
0.4
|
|
0.2
|
|
0.1
|
|
|||||
|
4.5
|
|
2.2
|
|
1.3
|
|
|||||
|
$
|
20.4
|
|
$
|
17.3
|
|
$
|
12.8
|
|
2013
|
2012
|
2011
|
||||||
Federal income tax rate
|
35.0
|
%
|
35.0
|
%
|
35.0
|
%
|
||
State taxes, net of federal benefit
|
1.9
|
%
|
1.5
|
%
|
0.1
|
%
|
||
Valuation allowance
|
0.9
|
%
|
0.8
|
%
|
1.9
|
%
|
||
Provision to return adjustments
|
(0.3
|
)%
|
(0.1
|
)%
|
0.2
|
%
|
||
Adjustments to estimated tax reserves
|
0.1
|
%
|
(1.2
|
)%
|
0.3
|
%
|
||
Other items, net
|
(0.2
|
)%
|
0.3
|
%
|
(2.9
|
)%
|
||
Effective income tax rate
|
37.4
|
%
|
36.3
|
%
|
34.6
|
%
|
(in millions)
|
2013
|
2012
|
|||||
Deferred tax assets:
|
|||||||
Deferred franchise fee revenue
|
$
|
0.8
|
|
$
|
1.0
|
|
|
State net operating loss carry forwards
|
6.3
|
|
5.9
|
|
|||
Deferred rentals
|
4.0
|
|
3.9
|
|
|||
Deferred compensation
|
3.8
|
|
3.8
|
|
|||
Allowance for doubtful accounts
|
0.1
|
|
0.4
|
|
|||
Insurance accruals
|
—
|
|
0.1
|
|
|||
Other accruals
|
0.4
|
|
0.4
|
|
|||
Reorganization costs
|
2.3
|
|
2.2
|
|
|||
Total gross deferred tax assets
|
17.7
|
|
17.7
|
|
|||
Deferred tax liabilities:
|
|||||||
Franchise value and trademarks
|
(19.3
|
)
|
(18.4
|
)
|
|||
Property, plant and equipment
|
(5.7
|
)
|
(2.4
|
)
|
|||
Total gross deferred liabilities
|
(25.0
|
)
|
(20.8
|
)
|
|||
Valuation allowance
|
(6.3
|
)
|
(5.9
|
)
|
|||
Net deferred tax liability
|
$
|
(13.6
|
)
|
$
|
(9.0
|
)
|
(in millions)
|
2013
|
2012
|
2011
|
||||||||
Balance, beginning of year
|
$
|
1.3
|
|
$
|
2.2
|
|
$
|
2.1
|
|
||
Additions related to current year
|
0.1
|
|
—
|
|
0.2
|
|
|||||
Reductions related to prior years
|
—
|
|
(0.8
|
)
|
—
|
|
|||||
Reductions due to statute expiration
|
—
|
|
(0.1
|
)
|
(0.1
|
)
|
|||||
Balance, end of year
|
$
|
1.4
|
|
$
|
1.3
|
|
$
|
2.2
|
|
(in millions)
|
2013
|
2012
|
2011
|
||||||||
Net income
|
$
|
34.1
|
|
$
|
30.4
|
|
$
|
24.2
|
|
||
Denominator for basic earnings per share — weighted average shares
|
23.6
|
|
23.9
|
|
24.5
|
|
|||||
Dilutive employee stock options
|
0.5
|
|
0.6
|
|
0.5
|
|
|||||
Denominator for diluted earnings per share
|
24.1
|
|
24.5
|
|
25.0
|
|
(in millions)
|
2013
|
2012
|
2011
|
||||||||
Revenues
|
|||||||||||
Franchise operations
|
$
|
127.3
|
|
$
|
114.8
|
|
$
|
99.2
|
|
||
Company-operated restaurants
|
78.7
|
|
64.0
|
|
54.6
|
|
|||||
$
|
206.0
|
|
$
|
178.8
|
|
$
|
153.8
|
|
|||
Operating profit
|
|||||||||||
Franchise operations
|
$
|
54.7
|
|
$
|
47.8
|
|
$
|
37.4
|
|
||
Company-operated restaurants
|
10.5
|
|
7.6
|
|
8.0
|
|
|||||
65.2
|
|
55.4
|
|
45.4
|
|
||||||
Less unallocated expenses
|
|||||||||||
Depreciation and amortization
|
6.7
|
|
4.6
|
|
4.2
|
|
|||||
Other expenses (income), net
|
0.3
|
|
(0.5
|
)
|
0.5
|
|
|||||
Operating profit
|
58.2
|
|
51.3
|
|
40.7
|
|
|||||
Interest expense, net
|
3.7
|
|
3.6
|
|
3.7
|
|
|||||
Income before income taxes
|
$
|
54.5
|
|
$
|
47.7
|
|
$
|
37.0
|
|
||
Capital expenditures
|
|||||||||||
Franchise operations
|
$
|
18.8
|
|
$
|
18.1
|
|
$
|
4.1
|
|
||
Company-operated restaurants
|
14.5
|
|
9.2
|
|
3.5
|
|
|||||
$
|
33.3
|
|
$
|
27.3
|
|
$
|
7.6
|
|
|||
Goodwill — year end
|
|||||||||||
Franchise operations
|
$
|
8.9
|
|
$
|
8.9
|
|
$
|
8.9
|
|
||
Company-operated restaurants
|
2.2
|
|
2.2
|
|
2.2
|
|
|||||
$
|
11.1
|
|
$
|
11.1
|
|
$
|
11.1
|
|
|||
Total assets — year end
|
|||||||||||
Franchise operations
|
$
|
154.8
|
|
$
|
140.0
|
|
$
|
109.8
|
|
||
Company-operated restaurants
|
45.7
|
|
32.4
|
|
25.8
|
|
|||||
|
$
|
200.5
|
|
$
|
172.4
|
|
$
|
135.6
|
|
||
(in millions, except per share data)
|
2013
|
||||||||||||||
Results of Operations
|
First Quarter |
Second Quarter |
Third Quarter |
Fourth Quarter |
|||||||||||
Total revenues
|
$
|
60.4
|
|
$
|
47.9
|
|
$
|
49.3
|
|
$
|
48.4
|
|
|||
Operating profit
|
16.2
|
|
14.5
|
|
15.4
|
|
12.1
|
|
|||||||
Net income
|
9.6
|
|
8.5
|
|
9.0
|
|
7.0
|
|
|||||||
Basic earnings per common share
|
0.41
|
|
0.36
|
|
0.38
|
|
0.30
|
|
|||||||
Diluted earnings per common share
|
0.40
|
|
0.35
|
|
0.37
|
|
0.29
|
|
(in millions, except per share data)
|
2012
|
||||||||||||||
Results of Operations
|
First Quarter |
Second Quarter |
Third Quarter |
Fourth Quarter |
|||||||||||
Total revenues
|
$
|
52.8
|
|
$
|
39.6
|
|
$
|
38.9
|
|
$
|
47.5
|
|
|||
Operating profit
|
14.2
|
|
11.4
|
|
11.1
|
|
14.6
|
|
|||||||
Net income
|
8.3
|
|
6.6
|
|
6.9
|
|
8.6
|
|
|||||||
Basic earnings per common share
|
0.34
|
|
0.28
|
|
0.29
|
|
0.36
|
|
|||||||
Diluted earnings per common share
|
0.34
|
|
0.27
|
|
0.29
|
|
0.35
|
|
(a)
|
The Company’s first quarters for 2013 and 2012 contained sixteen weeks. The fourth quarter 2012 included 13 weeks. The remaining quarters of 2013 and 2012 were twelve weeks. The 53rd week in 2012 increased sales by company-operated restaurants by approximately $1.2 million and increased franchise revenues by approximately $1.7 million. The net impact of the 53rd week earnings per share was approximately $0.01 per diluted share.
|
(b)
|
The Company opened four company-operated restaurants during the fourth quarter 2013 compared to five during the same period last year. Total sales of the four company-operated restaurants were $0.9 million for the fourth quarter 2013.
|
(c)
|
The Company recorded $1.8 million in franchise revenues related to two significant franchisee transfers during the fourth quarter 2012.
|
(d)
|
The Company recognized a $0.8 million in net gains on sale assets during the fourth quarter 2012 associated with the sale of real estate to a franchisee and the recognition of deferred gains related to seven properties formerly leased to a franchisee.
|