AFC Enterprises Reports Fiscal 2012 Results; Provides Fiscal 2013 Guidance

  AFC Enterprises Reports Fiscal 2012 Results; Provides Fiscal 2013 Guidance

Business Wire

ATLANTA -- February 27, 2013

AFC Enterprises, Inc. (NASDAQ: AFCE), the franchisor and operator of Popeyes®
restaurants, today reported results for fiscal 2012 which ended December 30,
2012. The Company also provided guidance for fiscal 2013 as well as an update
on its Strategic Plan.

AFC Enterprises Chief Executive Officer Cheryl Bachelder stated “It is
rewarding to see our team’s disciplined and creative work deliver outstanding
results to our franchise owners and our shareholders. We believe our five
pillar strategic plan will continue to deliver sustained growth well into the
future. Furthermore, we have now demonstrated the capability to seize
opportunities to accelerate our growth as we did with the fourth quarter
acquisition of restaurants in Minnesota and California and the opening of new
Company-owned restaurants in Indianapolis and Charlotte. Both of these actions
provide strong value to our shareholders.”

Fiscal 2012 Results and Highlights

  *Reported net income was $30.4 million, or $1.24 per diluted share,
    compared to $24.2 million, or $0.97 per diluted share, in 2011. Adjusted
    earnings per diluted share, which included approximately $0.01 for the
    53^rd week of operations, were $1.24 compared to $0.99 in 2011, a 25%
    increase. 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 6.9%, compared to a 3.1% increase last
    year.
  *System-wide sales increased 13.5%, compared to a 6.6% increase in 2011.
  *The Popeyes system opened 141 restaurants, compared to 140 last year, and
    permanently closed 75 restaurants, resulting in 66 net openings, compared
    to 65 in 2011.
  *General and administrative expenses were $67.6million, at 3.0% of
    system-wide sales compared to $61.3 million at 3.1% of system-wide sales
    in 2011.
  *Operating EBITDA of $55.9 million was 31.3% of total revenues, compared to
    $45.4 million, at 29.5% 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 $36.7 million, compared to $28.5 million in 2011. As a
    percentage of total revenue, free cash flow increased to 20.5%, compared
    to 18.5% last year. Free cash flow is a supplemental non-GAAP measure of
    performance. See the heading entitled “Management’s Use of Non-GAAP
    Financial Measures”.

  *In the fourth quarter:

       *Adjusted earnings per diluted share were $0.34 including
         approximately $0.01 for the 53^rd week of operations, compared to
         $0.24 in 2011, an increase of 42%.
       *Global same store sales were 6.2%, compared to 5.8% in 2011, for a
         two-year same store sales increase of 12.0%.
       *62 new restaurants were opened, compared to 52 in 2011. New openings
         included 5 Company-operated restaurants located in the Indianapolis
         and Charlotte markets.
       *The Company completed a $13.8 million acquisition of 27 restaurants
         in Minnesota and California. The restaurants were previously in the
         trade image of another quick service restaurant concept. Two of the
         acquired restaurants in California were converted into the Popeyes
         Louisiana Kitchen image and leased to a franchisee in December. Of
         the remaining 25 restaurants, 24 will be converted in 2013 and one
         property will be sold.
       *The Company recorded $1.8 million in franchise revenues related to
         two significant franchisee transfers.
       *The Company repurchased approximately 144,000 shares of its common
         stock for approximately $3.7 million, bringing total shares
         repurchased in fiscal 2012 to approximately 741,000 for approximately
         $15.2 million. These purchases were made in accordance with the
         Company's previous share repurchase guidance of approximately $15
         million for 2012. On February 13, 2013 the Board ofDirectors
         approved an additional $50.0 million for the share repurchase
         program. As of February 27, 2013, the remaining dollar amount of
         shares that may be repurchased under the program was approximately
         $51.4million.

Strategic Plan Update

Through its strategic plan, the Company has achieved momentum in growing
shareholder value through intense focus on its single brand, Popeyes Louisiana
Kitchen. To accelerate that momentum, the Company remains fully engaged in the
execution of the original four pillars of this strategic plan which was
launched in 2008. Those pillars are as follows:

  *Build a Distinctive Brand

       *With bold, flavorful food promoted by relevant advertising, national
         media impact and a spokesperson who resonates with a broad consumer
         audience, Popeyes’ emphasis on growing a distinctive brand has fueled
         our 10% cumulative increase in same stores sales over the last two
         years.
       *For four years in a row, our domestic same-store sales outpaced the
         chicken QSR and the entire QSR category, according to independent
         data.

  *Run Great Restaurants

       *Popeyes’ use of metric-driven scorecards to measure each restaurant’s
         performance in terms of guest experience, culture, operations, sales,
         and profits is a key differentiator of our brand. In 2012, our
         enhanced Guest Experience Monitor (“GEM”) yielded higher response
         rates, and identified areas of opportunity to deliver service that
         matches the quality of our food. As of year-end, approximately 70% of
         guest respondents rated Popeyes service a 5 out of 5 on our guest
         survey.
       *We finished 2012 with over 400 restaurants in the new Popeyes
         Louisiana Kitchen image and approximately 100 additional restaurants
         in progress. We expect to have over 60% of our domestic system in the
         new image by the end of 2013.

  *Grow Restaurant Profits

       *Popeyes domestic freestanding restaurants have realized profitability
         gains in dollars for four consecutive years.
       *Average restaurant operating profit margins, before rent, of Popeyes
         domestic freestanding franchised restaurants have increased to more
         than 20% through the end of the third quarter of 2012. Average
         restaurant operating profit increased by approximately $30,000 over
         last year, for a year-over-year growth rate of approximately 19%.
       *Our strong sales performance and our continued focus on cost saving
         initiatives offset commodity inflation of approximately 2% for the
         full year 2012. For 2013, we expect commodity costs to be essentially
         flat year-over-year, based on current market indications.

  *Accelerate Quality Restaurant Openings

       *The annual new restaurant growth of our global system has averaged
         approximately 6% over the last 5 years.
       *As a result of rigorous site selection and strong franchisee
         partners, the average first year sales of Popeyes new domestic
         freestanding restaurants are exceeding the overall domestic system
         average by approximately 40%.
       *We believe the Popeyes operating system and our disciplined real
         estate selection will continue to deliver new Popeyes restaurants
         with strong returns on investment for the Company portfolio as well
         as for our franchisees. The contribution to earnings made by
         Company-operated restaurants is accretive to our shareholders, and
         fuels our investment in our franchise system.
       *We believe the acquisition of restaurants in Minnesota and California
         will accelerate our development in these under-penetrated areas while
         providing an opportunity for growth by high-performing franchisees.

            *Of our 2013 expected adjusted earnings per share, approximately
              $0.10 will be derived from one-time fees associated with the
              conversion of these acquired restaurants.

       *Popeyes International continued its focus on strengthening existing
         markets and laying the groundwork for future growth. In the 4th
         quarter, 20 new restaurants were opened internationally, bringing
         total openings to 57 for the year. The initial sales results of these
         restaurants are trending higher than the international system average
         as a result of improved site selection, new restaurant marketing
         support and differentiated brand messaging.

In addition to the original four strategic pillars, the Company added a fifth
strategic pillar during 2012 designed to sustain brand momentum and
profitability in the future.

  *Create a Culture of Servant Leaders

       *Our stated Popeyes purpose is “to inspire servant leaders to achieve
         superior results.” Serving others and developing leaders is the
         essence of what we do for a living. With our fifth pillar, we are
         building a culture and people capability which we believe will
         translate to a meaningful competitive advantage in our team members’
         and guests’ experience.

The Company believes that our strategic plan will continue to keep us focused
on the essential elements of chain restaurant success: a differentiated and
innovative brand, a delightful guest experience in a beautiful restaurant
environment, and a growing franchisee network experiencing strong
profitability and sound investment returns. This is how we plan to deliver our
growth goals, creating value for our shareholders.

Fiscal 2013 Guidance

As described below, the Company is providing certain targets regarding its
expectations for fiscal 2013.

  *Same-store sales growth in the range of 3 to 4%.
  *New restaurant openings in the range of 175 to 195, and net restaurant
    openings in the range of 85 to 115, for a net unit growth rate of 4 to
    5.5%.

       *During 2013, the Company expects to open and operate 6-10 new
         restaurants.
       *Also included in 2013 openings are 24 of the restaurants acquired in
         Minnesota and California which will be converted to Popeyes primarily
         in the second and third quarters. Following the conversion, the
         restaurants will be leased to Popeyes franchisees to operate under
         standard franchise agreements. One remaining acquired restaurant
         property will be sold.

  *General and administrative expenses are expected to increase to $72 to $74
    million as we continue our investment in strategic initiatives and human
    capital. General and administrative expenses are expected to remain at
    approximately 3.0% of system-wide sales.
  *Capital expenditures for the year are expected to be $24 to $28 million,
    including the conversion of acquired restaurants in California and
    Minnesota and the development of Company-operated restaurants.
  *Adjusted earnings per diluted share in the range of $1.37 to $1.42, a 10
    to 14% increase over 2012, after including the effect of the following two
    items:

       *In 2013, the Company plans to repurchase $15 to $20 million in
         outstanding shares, compared to $15.2 million in 2012.
       *The Company’s effective income tax rate in 2013 is expected to be
         approximately 37%, compared to 36.3% in 2012.

2012 Financial Performance Review

Total system-wide sales increased by 13.5% in fiscal 2012. System-wide sales
were comprised of $2.2 billion in franchise restaurant sales and $64.0 million
in Company-operated restaurant sales. Of the 13.5% growth in 2012,
approximately 180 basis points was attributable to the effect of the 53rd
week.

Global same-store sales increased 6.9%, compared to a 3.1% increase in 2011.
Total domestic same-store sales increased 7.5%, compared to a 3.0% increase
last year. This positive sales growth reflects Popeyes continued introduction
of highly innovative new products, supported by expanded relevant advertising
and strengthened restaurant execution.

International same-store sales increased 2.6%, compared to a 3.3% increase
last year, the sixth consecutive year of positive same-store sales.

As result of positive same store sales and growth in new restaurants, total
revenues were $178.8 million, versus $153.8 million in the prior year, a 16%
increase.

Company-operated restaurant operating profit of $11.1 million was 17.3% of
sales, compared to $10.2 million and 18.7% of sales last year. The $0.9
million increase in Company-operated restaurant operating profit was primarily
due to same-store sales of 5.3% and two new restaurant openings in 2011. The
2012 operating profit includes approximately $0.3 million in pre-opening costs
associated with opening 5 new restaurants. The 2011 restaurant operating
profit includes a $0.5 million favorable adjustment to insurance reserves.
Excluding the effects of pre-opening costs in 2012 and the change in estimated
insurance reserves in 2011, Company-operated restaurant operating profit
margin would have been 17.8% in both 2012 and 2011. Company-operated
restaurant operating profit margin is a supplemental non-GAAP measure of
performance. See the heading entitled “Management’s Use of Non-GAAP Financial
Measures.”

General and administrative expenses were $67.6million, at 3.0% of system-wide
sales compared to $61.3 million at 3.1% of system-wide sales in 2011. The
increase in 2012 primarily reflects continued strategic investment in people
and resources to accelerate global sales, and Company-operated restaurant
development and remodeling. The Company’s general and administrative expenses
remain among the most efficient in the industry.

Other income was $0.5 million in 2012, compared to other expenses of $0.5
million last year. Fiscal 2012 results include $0.9 million in gains on sale
of real estate assets to franchisees, partially offset by $0.4 million loss on
disposal of property and equipment and other expenses, net.

Operating EBITDA was $55.9 million at 31.3% of total revenue, compared to
$45.4 million at 29.5% of total revenue last year. The $10.5 million increase
was primarily the result of higher franchise revenues and higher
Company-operated restaurant operating profit, partially offset by our
strategic investments to accelerate global sales and new restaurant
development. Operating EBITDA is a supplemental non-GAAP measure of
performance. See the heading entitled “Management’s Use of Non-GAAP Financial
Measures.”

Income tax expense was $17.3 million, at an effective tax rate of 36.3%,
compared to an effective tax rate of 34.6% in 2011. The prior year income tax
expense included a tax benefit of $0.8 million, or 2.2%, for work opportunity
tax credits related to prior years. Excluding the impact of these tax credits,
the 2012 effective rate was lower than 2011 due to minor favorable adjustments
to income tax reserves, partially offset by higher state income taxes. Other
differences in the effective tax rate and the statutory rates are due to
changes in estimated income tax reserves.

Reported net income was $30.4 million, or $1.24 per diluted share, compared to
$24.2 million, or $0.97 per diluted share last year. Adjusted earnings per
diluted share for fiscal 2012, which included approximately $0.01 for the
53^rd week of operations, were $1.24 compared to $0.99 in 2011, a 25%
increase. 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.”

As a result of strong revenue and operating profit, the Company generated free
cash flow of $36.7 million in 2012, compared to $28.5 million in 2011. As a
percentage of total revenue, free cash flow increased to 20.5%, compared to
18.5% last year. The Company’s free cash flow margin is amongst the highest in
the industry. Free cash flow is a supplemental non-GAAP measure performance.
See the heading entitled “Management’s Use of Non-GAAP Financial Measures” for
the Company’s revised definition of free cash flow.

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

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

Long-Term Guidance

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

Conference Call

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

Corporate Profile

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

               Supplemental Financial Information on pages 8-17

AFC Enterprises, Inc.
Consolidated Balance Sheets
As of December 30, 2012 and December 25, 2011
(In millions, except share data)
                                                                  
ASSETS                                                 2012           2011  
Current assets:
Cash and cash equivalents                          $   17.0        $   17.6
Accounts and current notes receivable, net             7.3             7.0
Other current assets                                   4.2             4.8
Advertising cooperative assets, restricted             25.7           18.9  
Total current assets                                   54.2           48.3  
Long-term assets:
Property and equipment, net                            51.3            27.4
Goodwill                                               11.1            11.1
Trademarks and other intangible assets, net            53.9            46.5
Other long-term assets, net                            1.9            2.3   
Total long-term assets                                 118.2          87.3  
Total assets                                       $   172.4      $   135.6 
                                                                       
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable                                   $   7.6         $   6.1
Other current liabilities                              5.9             8.2
Current debt maturities                                6.0             5.2
Advertising cooperative liabilities                    25.7           18.9  
Total current liabilities                              45.2           38.4  
Long-term liabilities:
Long-term debt                                         66.8            58.8
Deferred credits and other long-term liabilities       26.2           24.6  
Total long-term liabilities                            93.0           83.4  
                                                                       
Commitments and contingencies
Shareholders' equity:
Preferred stock ($.01 par value; 2,500,000 shares
authorized;
0 issued and outstanding)                              -               -
Common stock ($.01 par value; 150,000,000 shares
authorized;
23,907,428  and 24,383,274 shares issued and
outstanding
at the end of fiscal years 2012 and 2011,              0.2             0.2
respectively)
Capital in excess of par value                         87.6            97.6
Accumulated deficit                                    (52.8 )         (83.2 )
Accumulated other comprehensive loss                   (0.8  )         (0.8  )
Total shareholders' equity                             34.2           13.8  
                                                                       
Total liabilities and shareholders' equity         $   172.4      $   135.6 
                                                                             
                                                                             

AFC Enterprises, Inc.
Consolidated Statements of Operations
(In millions, except per share data)
                                                     
                     12 Weeks Ended                      Year Ended
                     12/30/12        12/25/11          12/30/12     12/25/11
                     (unaudited)       (unaudited)       (53            (52
                                                         weeks)         weeks)
                                                                                 
Revenues:
Sales by
Company-operated $   16.4          $   12.4          $   64.0       $   54.6
restaurants
Franchise            30.1              22.9              110.5          95.0
revenues
Rent and other       1.0              1.0               4.3           4.2
revenues
Total revenues       47.5             36.3              178.8         153.8
                                                                                 
Expenses:
Restaurant
employee,
occupancy and
other
expenses             8.1               5.5               31.2           26.1
Restaurant food,
beverages and        5.7               4.2               21.7           18.3
packaging
Rent and other
occupancy            0.8               0.6               2.9            2.7
expenses
General and
administrative       17.9              15.1              67.6           61.3
expenses
Depreciation and     1.1               1.0               4.6            4.2
amortization
Other expenses       (0.7    )         0.5               (0.5   )       0.5
(income), net
Total expenses       32.9             26.9              127.5         113.1
                                                                                 
Operating profit     14.6              9.4               51.3           40.7
Interest             0.9              0.9               3.6           3.7
expense, net
                                                                                 
Income before        13.7              8.5               47.7           37.0
income taxes
Income tax           5.1              2.8               17.3          12.8
expense
                                                                                 
Net income       $   8.6          $   5.7           $   30.4      $   24.2
                                                                                 
Earnings per
common share,    $   0.36         $   0.25          $   1.27      $   0.99
basic:
                                                                                 
Earnings per
common share,    $   0.35         $   0.23          $   1.24      $   0.97
diluted:
                                                                                 
Weighted-average
shares
outstanding
Basic                23.6              24.0              23.9           24.5
Diluted              24.3              24.5              24.5           25.0
                                                                                 
                                                                                 

AFC Enterprises, Inc.
Consolidated Statements of Cash Flows
(In millions)
                                                              
                                                     2012          2011  
Cash flows provided by (used in) operating
activities:
Net income                                       $   30.4          $ 24.2
Adjustments to reconcile net income to net cash
provided by (used in)
operating activities:
Depreciation and amortization                        4.6             4.2
Disposals of property and equipment                  0.3             0.5
Net gain on sale of assets                           (0.9  )         (0.8  )
Deferred income taxes                                2.2             1.3
Non-cash interest expense, net                       0.4             0.5
Provision for credit losses (recoveries)             (0.1  )         (0.3  )
Excess tax benefit from share-based payment          (0.4  )         (0.1  )
arrangements
Stock-based compensation expense                     4.9             2.9
Change in operating assets and liabilities:
Accounts receivable                                  (0.2  )         (1.4  )
Other operating assets                               0.8             (0.2  )
Accounts payable and other operating liabilities     (1.8  )        1.3   
Net cash provided by operating activities            40.2          32.1  
                                                                             
Cash flows provided by (used in) investing
activities:
Capital expenditures                                 (27.3 )         (7.6  )
Proceeds from dispositions of property and           0.4             0.7
equipment
Investment in trademark                              (8.0  )         -
Proceeds from notes receivable and other             -             0.3   
investing activities
Net cash used in investing activities                (34.9 )        (6.6  )
                                                                             
Cash flows provided by (used in) financing
activities:
Principal payments – 2010 Credit Facility (term      (5.0  )         (3.8  )
loan)
Borrowings under 2010 revolving credit facility      13.0            2.0
Excess tax benefits from share-based payment         0.4             0.1
arrangements
Share repurchases                                    (15.2 )         (22.3 )
Proceeds from exercise of employee stock options     1.3             0.6
Other financing activities, net                      (0.4  )        (0.4  )
Net cash used in financing activities                (5.9  )        (23.8 )
                                                                             
Net increase (decrease) in cash and cash             (0.6  )         1.7
equivalents
Cash and cash equivalents at beginning of year       17.6          15.9  
Cash and cash equivalents at end of year         $   17.0         $ 17.6  
                                                                             
                                                                             

                         12 Weeks ended                Year Ended
                          12/30/12    12/25/11      12/30/12    12/25/11 
Same-store sales growth                                         
^(1)
Company-operated          7.8    %       (1.5     %)       5.3    %       1.1      %
restaurants
Domestic franchised       6.4    %       6.2      %        7.5    %       3.1      %
restaurants
Total domestic
(Company-operated and     6.4    %       5.9      %        7.5    %       3.0      %
franchised restaurants)
International             4.3    %       4.6      %        2.6    %       3.3      %
franchised restaurants
Total global system       6.2    %       5.8      %        6.9    %       3.1      %
                                                                                     
Company-operated
restaurants (all
domestic)
Restaurants at            40             38                40             38
beginning of period
New restaurant openings   5              2                 5              2
Less: Permanent           -              -                 -              -
closings
Temporary
(closings)/re-openings,   -             -                -             -        
net
Restaurants at end of     45             40                45             40
period
                                                                                     
Franchised restaurants
(domestic)
Restaurants at            1,606          1,560             1,587          1,542
beginning of period
New restaurant openings   37             30                79             71
Less: Permanent           (6     )       (2       )        (29    )       (27      )
closings
Temporary
(closings)/re-openings,   (3     )       (1       )        (3     )       1        
net
Restaurants at end of     1,634          1,587             1,634          1,587
period
                                                                                     
Franchised restaurants
(international)
Restaurants at            414            400               408            397
beginning of period
New restaurant openings   20             20                57             67
Less: Permanent           (13    )       (9       )        (46    )       (48      )
closings
Temporary
(closings)/re-openings,   4             (3       )        6             (8       )
net
Restaurants at end of     425            408               425            408
period
                                                                                     
Total restaurant count    2,104         2,035            2,104         2,035    
at end of period
                                                                                     
                                                                                     

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

As a result, total global system same-store sales growth for the 12 weeks
ended 12/30/12 increased to 6.2% compared to the previously reported 6.0%.
Domestic franchisee restaurant same-store sales increased to 6.4% compared to
the previously reported 6.3%. International franchisee restaurant same-store
sales increased to 4.3% compared to the previously reported 3.5%.

For the full year, total global system same-store sales growth increased to
6.9% compared to the previously reported 6.8%. International franchisee
restaurant same-store sales increased to 2.6% compared to the previously
reported 2.4%.

Management’s Use of Non-GAAP Financial Measures

Adjusted earnings per diluted share, Operating EBITDA, Company-operated
restaurant operating profit margins, and Free cash flow are supplemental
non-GAAP financial measures. The Company uses Adjusted earnings per diluted
share, Operating EBITDA, Company-operated restaurant operating profit margins,
and Free cash flow, in addition to net income, operating profit and cash flows
from operating activities, to assess its performance and believes it is
important for investors to be able to evaluate the Company using the same
measures used by management. The Company believes these measures are important
indicators of its operational strength and the performance of its business.
Company-operated restaurant operating profit margins, Operating EBITDA, free
cash flow and adjusted earnings per diluted share as calculated by the Company
are not necessarily comparable to similarly titled measures reported by other
companies. In addition, Company-operated restaurant operating profit margins,
Operating EBITDA, free cash flow and adjusted earnings per diluted share: (a)
do not represent net income, cash flows from operations or earnings per share
as defined by GAAP; (b) are not necessarily indicative of cash available to
fund cash flow needs; and (c) should not be considered as an alternative to
net income, earnings per share, operating profit, cash flows from operating
activities or other financial information determined under GAAP.

Adjusted earnings per diluted share: Calculation and Definition

The Company defines adjusted earnings for the periods presented as the
Company’s reported net income after adjusting for certain non-operating items
consisting of the following:

(i) other expense (income), net, as follows:

  *Fourth quarter 2012 includes a $0.3 million gain on the sale of real
    estate assets and the recognition of $0.5 million in deferred gains
    related to seven properties formerly leased to a franchisee, partially
    offset by $0.1 million in disposals of fixed assets and other expenses,
    net.
  *Fourth quarter 2011 includes $0.4 million in expenses for the global
    service center relocation and $0.2 million in other expenses offset by
    $0.1 million net gain on the 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;
  *Fiscal 2011 includes $0.8 million in expenses for the global service
    center relocation, and $0.5 million in disposals of fixed assets offset by
    a $0.8 million net gain on the sale of assets;

(ii) for fiscal 2011, $0.5 million in accelerated depreciation related to the
Company’s relocation to a new global service center;

(iii) for fiscal 2012, $0.5 million in legal fees related to licensing
arrangements; and

(iv) the tax effect of these adjustments.

Adjusted earnings per diluted share provides the per share effect of adjusted
net income on a diluted basis. The following table reconciles on a historical
basis the fourth quarter 2012, fourth quarter 2011, fiscal 2012 and fiscal
2011, the Company’s adjusted earnings per diluted share on a consolidated
basis to the line on its consolidated statement of operations entitled net
income, which the Company believes is the most directly comparable GAAP
measure on its consolidated statement of operations to adjusted earnings per
diluted share:

(in
millions,      Q4 2012       Q4 2011       Fiscal        Fiscal
except per                                         2012             2011
share data)
Net income     $  8.6       $  5.7       $  30.4      $  24.2
Other
expense              (0.7 )           0.5              (0.5 )           0.5
(income),
net
Accelerated
depreciation
related to   
the
Company’s
relocation
to a new
Global               -                -                -                0.5
Service
Center
Fees related
to licensing         -                -                0.5              -
arrangements
Tax effect       0.3        (0.2 )      -          (0.5 )
Adjusted net   $  8.2      $  6.0      $  30.4     $  24.7 
income
Adjusted
earnings per   $  0.34     $  0.24     $  1.24     $  0.99 
diluted
share
Weighted
average
diluted          24.3       24.5       24.5       25.0 
shares
outstanding
                                                                               
                                                                               

Operating EBITDA: Calculation and Definition

The Company defines Operating EBITDA as “earnings before interest expense,
taxes, depreciation and amortization, other expenses (income), net, and legal
fees related to licensing arrangements”. The following table reconciles on a
historical basis for 2012 and 2011, the Company’s earnings before interest
expense, taxes, depreciation and amortization, other expenses (income), net
and legal fees related to licensing arrangements (“Operating EBITDA”) on a
consolidated basis to the line on its consolidated statement of operations
entitled net income, which the Company believes is the most directly
comparable GAAP measure on its consolidated statement of operations to
Operating EBITDA. “Operating EBITDA as a percentage of Total Revenues” is
defined as “Operating EBITDA” divided by “Total Revenues”.

(dollars in millions)                               Fiscal 2012  Fiscal 2011
                                                                 
Net income                                         $ 30.4          $  24.2
Interest expense, net                                3.6              3.7
Income tax expense                                   17.3             12.8
Depreciation and amortization                        4.6              4.2
Other expenses (income), net                         (0.5    )        0.5
Legal fees related to licensing arrangements       0.5           -      
Operating EBITDA                                  $ 55.9        $  45.4   
                                                                   
Total Revenues                                    $ 178.8       $  153.8  
Operating EBITDA as a percentage of Total          31.3    %      29.5   %
Revenues
                                                                             
                                                                             

Company-Operated Restaurant Operating Profit Margin: Calculation and
Definition

The Company defines adjusted Company-operated restaurant operating profit as
“sales by Company-operated restaurants” minus “restaurant employee, occupancy
and other expenses” minus “restaurant food, beverages and packaging”. The
following table reconciles on a historical basis for 2012 and 2011, the
Company’s Company-operated restaurant operating profits to the line item on
its consolidated statement of operations entitled “sales by Company-operated
restaurants,” which the Company believes is the most directly comparable GAAP
measure on its consolidated statement of operations to Company-operated
restaurant operating profit. “Company-operated restaurant operating profit
margin” is defined as “Company-operated restaurant operating profit” divided
by “sales by Company-operated restaurants”.

(dollars in millions)                               Fiscal 2012  Fiscal 2011
                                                                
Sales by Company-operated restaurants                $  64.0      $  54.6
Restaurant employee, occupancy and other expenses        (31.2 )       (26.1 )
Restaurant food, beverages and packaging              (21.7 )    (18.3 )
Company-operated restaurant operating profit        $  11.1    $  10.2  
Company-operated restaurant operating profit          17.3  %    18.7  %
margin
                                                                             
                                                                             

Free cash flow: Calculation and Definition

The Company defines Free Cash Flow as “net income” plus “depreciation and
amortization”, plus “stock-based compensation expense”, minus “maintenance
capital expenditures” (which includes: for fiscal 2012, $0.6 million in
Company-operated restaurant reimages, $1.1 million of information technology
hardware and software and $1.5 million in other capital assets to maintain,
replace and extend the lives of Company-operated restaurant facilities, and
for fiscal 2011, $1.5 million in Company-operated restaurant reimages, $0.8
million of information technology hardware and software and $0.5 million in
other capital assets to maintain, replace and extend the lives of
Company-operated restaurant facilities). In 2012, maintenance capital
expenditures exclude $16.9 million related to the acquired restaurants in
Minnesota and California and $7.2 million for the construction of new
Company-operated restaurants. In 2011, maintenance capital expenditures
exclude $3.3 million related to the construction of the new corporate office,
and $1.5 million for the construction of new Company-operated restaurants.

The following table reconciles on a historical basis for fiscal 2012 and
fiscal 2011, the Company’s free cash flow on a consolidated basis to the line
on its consolidated statement of operations entitled net income, which the
Company believes is the most directly comparable GAAP measure on its
consolidated statement of operations to free cash flow. “Free cash flow as a
percentage of total revenue (free cash flow margin)” is defined as “Free cash
flow” divided by “Total revenue.”

(dollars in millions)                               Fiscal 2012  Fiscal 2011
                                                                 
Net income                                         $ 30.4          $  24.2
Depreciation and amortization                        4.6              4.2
Stock-based compensation expense                     4.9              2.9
Maintenance capital expenditures                   (3.2    )      (2.8   )
Free cash flow                                    $ 36.7        $  28.5   
Total Revenue                                     $ 178.8       $  153.8  
Free cash flow as a percentage of total revenue    20.5    %      18.5   %
(Free cash flow margin)
                                                                             

Forward-Looking Statement: Certain statements in this release contain
“forward-looking statements” within the meaning of the federal securities
laws. Statements regarding future events and developments and our future
performance, as well as management’s current expectations, beliefs, plans,
estimates or projections relating to the future, are forward-looking
statements within the meaning of these laws. These forward-looking statements
are subject to a number of risks and uncertainties. Examples of such
statements in this Press Release include discussions regarding the Company’s
planned implementation of its strategic plan, planned share repurchases,
projections and expectations regarding same-store sales for fiscal 2013 and
beyond, expectations regarding future growth, the Company’s ability to improve
restaurant level margins, guidance for new restaurant openings and closures,
effective income tax rate, and the Company’s anticipated 2013 and long-term
performance, including projections regarding general and administrative
expenses, net earnings per diluted share, operating profit, operating EBITDA,
and similar statements of belief or expectation regarding future events. Among
the important factors that could cause actual results to differ materially
from those indicated by such forward-looking statements are: competition from
other restaurant concepts and food retailers, continued disruptions in the
financial markets, the loss of franchisees and other business partners, labor
shortages or increased labor costs, increased costs of our principal food
products, changes in consumer preferences and demographic trends, as well as
concerns about health or food quality, instances of avian flu or other
food-borne illnesses, general economic conditions, the loss of senior
management and the inability to attract and retain additional qualified
management personnel, limitations on our business under our credit facility,
our ability to comply with the repayment requirements, covenants, tests and
restrictions contained in our credit facility, failure of our franchisees, a
decline in the number of franchised units, a decline in our ability to
franchise new units, slowed expansion into new markets, unexpected and adverse
fluctuations in quarterly results, increased government regulation, effects of
volatile gasoline prices, supply and delivery shortages or interruptions,
currency, economic and political factors that affect our international
operations, inadequate protection of our intellectual property and liabilities
for environmental contamination and the other risk factors detailed in our
Annual Report on Form 10-K and other documents we file with the Securities and
Exchange Commission. Therefore, you should not place undue reliance on any
forward-looking statements.

Contact:

AFC Enterprises, Inc.
Investor inquiries:
Rebecca Gardy, 404-459-4673
Director, Finance & Investor Relations
investor.relations@afce.com
or
Media inquiries:
Alicia Thompson, 404-459-4572
Vice President, Popeyes Communications & Public Relations
popeyescommunications@popeyes.com
 
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