AFC Reports Financial Results for Second Quarter 2013; Reiterates Fiscal 2013 Earnings Guidance

  AFC Reports Financial Results for Second Quarter 2013; Reiterates Fiscal
  2013 Earnings Guidance

Business Wire

ATLANTA -- August 21, 2013

AFC Enterprises, Inc. (NASDAQ: AFCE), the franchisor and operator of Popeyes®
restaurants, today reported results for its fiscal second quarter 2013 which
ended July 14, 2013. The Company also reiterated earnings guidance for fiscal
2013 and provided an update on its Strategic Plan.

Commenting on the second quarter performance, AFC Enterprises Chief Executive
Officer Cheryl Bachelder stated, “Popeyes’ team continues to demonstrate a
sound strategy for accelerated unit growth fueled by innovation, a compelling
new restaurant design, and increasing restaurant operating profit. Given the
opportunity for improving our guest experience and growing our global
footprint, I believe we have significant runway ahead and the human capital to
deliver on that potential.”

Second Quarter 2013 Highlights

  *Reported net income was $8.5 million compared to $6.6 million last year.
    Diluted earnings per share were $0.35 compared to $0.27 last year, an
    increase of 30%. Through the end of the second quarter, adjusted earnings
    per diluted share were $0.75 compared to $0.62 last year, an increase of
    21%. 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 4.4% compared to 7.5% last year.
    Year-to-date through the end of the second quarter, global same-store
    sales were 4.5% compared to a 7.5% increase in the prior year, for a two
    year same-store sales growth of 12%.
  *Global system-wide sales increased 11.6% compared to an 11.5% increase
    last year.
  *The Popeyes system opened 44 restaurants and closed 16 restaurants,
    resulting in 28 net openings compared to 9 in the prior year. Through the
    end of the second quarter, the Popeyes system had opened 84 and closed 40
    restaurants, for net restaurant openings of 44 compared to 18 last year.
  *Through the end of the second quarter, Operating EBITDA increased 19% to
    $34.1 million at 31.5% of total revenues, compared to the prior year
    Operating EBITDA of $28.6 million at 31% of total revenues. 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 through the end of the second quarter was $21.8 million
    compared to $18.2 million 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.”

Strategic Plan Update

The Company continues to strengthen its competitive position in the restaurant
industry and quick service restaurant sector by executing its Strategic Plan
which is based on the following pillars:

  *Build a Distinctive Brand

       *In the second quarter, Popeyes promoted Three of Kind – three
         different configurations of our Bonafide® bone-in chicken and
         Handcrafted Tenders, each for $3.99. We also featured Garlic Pepper
         Wicked Chicken and reprised Zatarain’s® Butterfly Shrimp.
       *This was Popeyes’ 13^th consecutive quarter of positive same-store
         sales. According to independent industry research, Popeyes has
         outpaced the same-store sales of the entire Chicken-QSR category for
         21 consecutive quarters and the same-store sales of the overall QSR
         category for seven consecutive quarters.

  *Run Great Restaurants

       *As of the end of the second quarter, approximately 40% of the
         domestic system was in the new Popeyes Louisiana Kitchen image. The
         Company expects approximately 60% of the domestic system to be in the
         new image by the end of 2013. On average, reimaged restaurants are
         enjoying a 3% to 4% sales lift.
       *At the end of the second quarter, approximately 70% of the domestic
         system restaurants attained speed of service below our 180 second
         standard.
       *The Company’s Guest Experience Monitor, or GEM, percent delighted
         scores were approximately 61% at the end of the second quarter.

  *Grow Restaurant Profits

       *Average restaurant operating profit before rent of Popeyes domestic
         freestanding franchised restaurants increased to 22.2% of total
         revenues for the first quarter, compared to 21.8% in the first
         quarter of 2012.
       *Commodity prices were flat for the second quarter versus year ago,
         and up 1.2% through the end of the second quarter. For full year
         2013, we expect commodity costs to be down slightly versus the prior
         year.

  *Accelerate Quality Restaurant Openings

       *The Company further expanded its presence in Indianapolis, IN with
         the opening of two restaurants. The average annualized sales volumes
         of our restaurants in this market are significantly out-performing
         the domestic system average of $1.2 million.
       *In the second quarter,we converted and franchised eight of the 26
         restaurants acquired in 2012 in Minnesota and California. One-time
         franchisee fees of approximately $1.8 million were recognized in the
         second quarter as franchising of these restaurants was completed. We
         have converted 13 of the 26 acquired restaurants and the remaining 13
         acquired restaurants are expected to be converted at a steady pace
         over the balance of 2013.

  *Create a Culture of Servant Leaders

       *We place great emphasis on our human capital and its proven impact on
         our guest experience and the sustained long term performance of our
         Company.
       *In 2013, we are defining the critical elements that will become
         Popeyes distinctive employee and guest experiences. We are also
         building the disciplines, tools and processes needed for in-market
         testing followed by a system launch.

Second Quarter Financial Performance Review

Total system-wide sales increased by 11.6% reflecting the brand’s successful
product promotions and expanding domestic footprint. System-wide sales were
comprised of $554.0 million in franchise restaurant sales and $17.5 million in
company-operated restaurant sales.

Global same-store sales increased 4.4% in the second quarter compared to a
7.5% increase in 2012, for a two-year growth of 11.9%.

Total domestic same-store sales increased by 4.3% compared to a 8.4% increase
last year for a two-year growth of 12.7%.

Same-store sales growth of our company-operated restaurants was positive 1.7%
in the second quarter. The two-year same-store sales growth of
Company-operated restaurants was 9.5%.

International same-store sales increased 5.8%, representing the 14^th
consecutive quarter of positive same-store sales. Second quarter two-year
international same-store sales growth was 6.7%.

As a result of positive same store sales and new restaurant growth, total
revenues were $47.9 million compared to $39.6 million last year, an increase
of 21% year-over-year.

Company-operated restaurant operating profit (“ROP”) was $3.2 million at 18.3%
of sales, compared to $2.5 million at 17.5% of sales last year. The $0.7
million increase in ROP was primarily due to higher revenues resulting from
positive same-store sales and new restaurant openings, and an improvement in
food cost margins. Company-operated restaurant operating profit 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 $16.8 million at 2.9% of system-wide
sales, compared to $14.6 million at 2.9% of system-wide sales last year. The
$2.2 million increase was primarily attributable to an increase in domestic
franchisee restaurant support services, international franchise development
and marketing support, an increase in performance-based incentive compensation
expense and other general and administrative expenses, net.

Through the end of the second quarter, Operating EBITDA was $34.1 million at
31.5% of total revenues, compared to $28.6 million at 31.0% of total revenues
in 2012. The 50 basis point increase was primarily a result of strong
same-store sales, one-time franchise fees associated with the conversion of
the restaurants in Minnesota and California acquired in 2012 and higher
restaurant operating profit at Company-operated restaurants. The Company’s
Operating EBITDA margin remains among the highest in the QSR industry.
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 $5.1 million at an effective tax rate of 37.5%,
compared to an effective tax rate of 37.1% in the prior year. The effective
tax rates differ from statutory rates due to tax credits and permanent
differences between reported income before income taxes and taxable income for
tax purposes.

Reported net income was $8.5 million, or $0.35 per diluted share, compared to
$6.6 million, or $0.27 per diluted share last year. This improvement was
primarily due to strong same-store sales, new restaurant openings, one-time
franchise fees associated with the conversion of the restaurants in Minnesota
and California acquired in 2012 and stronger restaurant operating profit at
Company-operated restaurants. Through the end of the second quarter, adjusted
earnings per diluted share were $0.75 compared to $0.62 last year, an increase
of 21%. 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 through the second quarter of $21.8 million compared to $18.2
million in 2012. As a percentage of total revenue, Free cash flow increased to
20.1%, compared to 19.7% 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.”

During the second quarter, the Company repurchased approximately 96,000 shares
of its common stock for approximately $3.4 million. Through the end of the
second quarter, the Company has repurchased approximately 234,000 shares of
common stock for approximately $8.4 million.

Through the end of the second quarter, the Company invested $6.1 million in
the conversion of restaurants acquired in Minnesota and California in 2012,
and $7.2 million in the construction and opening of new company restaurants.

The Popeyes system opened 44 new restaurants in the second quarter, which
included 29 domestic and 15 international restaurants, compared to 25 openings
last year. The Company permanently closed 16 restaurants, resulting in 28 net
openings compared to 9 net openings in the second quarter of 2012. The 16
closures in the second quarter included 6 domestic and 10 international
restaurants. Through the end of the second quarter, Popeyes had net openings
of 44 restaurants compared to 18 the prior year.

On a system-wide basis, Popeyes had 2,153 restaurants operating at the end of
the second quarter, compared to 2,049 at the end of the second quarter of
2012. Total unit count was comprised of 1,721 domestic and 432 international
restaurants in 28 foreign countries and three territories. Of this total,
2,106 were franchised and 47 were Company-operated restaurants.

Fiscal 2013 Guidance

Given the strong sales performance in the first and second quarters, we are
increasing our expectation of global same-store sales growth to 3.5% to 4.5%
compared to previous guidance of the upper end of 3% to 4%.

We are also increasing our expectation of full year general and administrative
expenses to $73 to $75 million compared to our previous guidance of $72 to $74
million. As a percentage of system-wide sales, general and administrative
expenses remain at approximately 3.0%, among the lowest in the industry.

As a result of new company restaurant development in the first half of 2013
and our pipeline, we now expect to open between 8 and 10 total new company
restaurants this year, compared to previous guidance of 6 to 10.

The Company reiterates the following guidance for fiscal 2013:

  *New restaurant openings in the range of 175 to 195 restaurants, and net
    restaurant openings in the range of 85 to 115. Included in 2013 total
    openings are approximately 60 international restaurants.
  *Capital expenditures of $24 to $28 million, including the conversion of
    restaurants acquired in 2012 in Minnesota and California.
  *An expected effective income tax rate in 2013 of 37% compared to 36.3% in
    2012.
  *The Company plans to repurchase approximately $15 to $20 million in
    outstanding shares, compared to $15.2 million of share repurchases in
    2012.

The Company also reiterates adjusted earnings per diluted share to be at the
upper end of $1.37 to $1.42 for fiscal 2013.

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 August 22, 2013, to review
the results of the second quarter 2013. To access the Company’s webcast, go to
www.afce.com, select “Investor relations” and then select “AFC Enterprises
Second Quarter 2013 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 restaurant concept based on
number of units. As of July 14, 2013, Popeyes had 2,153 restaurants operating
in the United States, Puerto Rico, Guam, the Cayman Islands and 28 foreign
countries. AFC’s primary objective is to deliver industry-competitive growth
in sales and profits by offering excellent investment opportunities in its
Popeyes brand and providing exceptional support systems and services to its
franchise owners. AFC Enterprises can be found at www.afce.com.



AFC Enterprises, Inc.
Condensed Consolidated Balance Sheets (unaudited)
(In millions, except share data)
                                                             
                                                    7/14/2013      12/30/2012
Current assets:
Cash and cash equivalents                         $ 15.2          $ 17.0
Accounts and current notes receivable, net          7.6             7.3
Other current assets                                5.8             4.2
Advertising cooperative assets, restricted          27.7           25.7    
Total current assets                                56.3           54.2    
Long-term assets:
Property and equipment, net                         63.4            51.3
Goodwill                                            11.1            11.1
Trademarks and other intangible assets, net         53.6            53.9
Other long-term assets, net                         1.6            1.9     
Total long-term assets                              129.7          118.2   
Total assets                                      $ 186.0        $ 172.4   
                                                                    
                                                                    
Current liabilities:
Accounts payable                                  $ 7.6           $ 7.6
Other current liabilities                           6.2             5.9
Current debt maturities                             6.3             6.0
Advertising cooperative liabilities                 27.7           25.7    
Total current liabilities                           47.8           45.2    
Long-term liabilities:
Long-term debt                                      62.1            66.8
Deferred credits and other long-term                27.9           26.2    
liabilities
Total long-term liabilities                         90.0           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; authorized; 23,852,163 and
23,907,428 shares issued and outstanding at         0.2             0.2
July 14, 2013 and December 30, 2012,
respectively)
Capital in excess of par value                      83.3            87.6
Accumulated deficit                                 (34.7  )        (52.8   )
Accumulated other comprehensive loss                (0.6   )        (0.8    )
Total shareholders' equity                          48.2           34.2    
                                                                    
Total liabilities and shareholders' equity        $ 186.0        $ 172.4   
                                                                            
                                                                            

AFC Enterprises, Inc.
Condensed Consolidated Statements of Operations (unaudited)
(In millions, except per share data)
                                               
                       12 Weeks Ended                 28 Weeks Ended
                       7/14/2013     7/8/2012       7/14/2013     7/8/2012
                                                                      
Revenues:
Sales by
company-operated     $ 17.5          $ 14.3         $ 41.4          $ 34.1
restaurants
Franchise              29.1            24.3           64.3            56.0
revenues
Rent and other         1.3             1.0            2.6             2.3
revenues
Total revenues         47.9            39.6           108.3           92.4
                                                                      
Expenses:
Restaurant
employee,              8.5             7.0            19.8            16.4
occupancy and
other expenses
Restaurant food,
beverages and          5.8             4.8            13.7            11.4
packaging
Rent and other
occupancy              0.8             0.6            1.9             1.5
expenses
General and
administrative         16.8            14.6           38.8            35.0
expenses
Depreciation and       1.5             1.1            3.3             2.4
amortization
Other expenses         -               0.1            0.1             0.1
(income), net
Total expenses         33.4            28.2           77.6            66.8
                                                                      
Operating profit       14.5            11.4           30.7            25.6
Interest               0.9             0.9            2.0             2.0
expense, net
                                                                      
Income before          13.6            10.5           28.7            23.6
income taxes
Income tax             5.1             3.9            10.6            8.7
expense
                                                                      
Net income           $ 8.5           $ 6.6          $ 18.1          $ 14.9
                                                                      
Earnings per
common share,        $ 0.36          $ 0.28         $ 0.77          $ 0.62
basic:
                                                                      
Earnings per
common share,        $ 0.35          $ 0.27         $ 0.75          $ 0.61
diluted:
                                                                      
Weighted average
shares
outstanding
Basic                  23.6            23.9           23.6            24.0
Diluted                24.1            24.4           24.2            24.5
                                                                      
                                                                      

AFC Enterprises, Inc.
Condensed Consolidated Statements of Cash Flows (unaudited)
(In millions)
                                                  
                                                      28 Weeks Ended
                                                      7/14/2013     7/8/2012
Cash flows provided by (used in) operating
activities:
Net income                                          $ 18.1          $ 14.9
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization                         3.3             2.4
Asset write-downs                                     0.2             0.2
Net gain on sale of assets                            (0.1   )        (0.1   )
Deferred income taxes                                 0.4             (0.6   )
Non-cash interest expense, net                        0.2             0.2
Provision for credit losses                           0.1             (0.1   )
Excess tax benefits from share-based payment          (1.9   )        (0.8   )
arrangements
Stock-based compensation expense                      2.9             2.5
Change in operating assets and liabilities:
Accounts receivable                                   (0.4   )        (0.1   )
Other operating assets                                1.0             2.1
Accounts payable and other operating liabilities      (0.3   )        (4.4   )
Net cash provided by operating activities             23.5           16.2   
                                                                      
Cash flows used in investing activities:
Capital expenditures                                  (15.8  )        (1.9   )
Net cash used in investing activities                 (15.8  )        (1.9   )
                                                                      
Cash flows provided by (used in) financing
activities:
Principal payments - 2010 Credit Facility (term       (4.3   )        (3.8   )
loan)
Share repurchases                                     (8.4   )        (8.6   )
Proceeds from exercise of employee stock options      1.5             0.5
Excess tax benefits from share-based payment          1.9             0.8
arrangements
Other financing activities, net                       (0.2   )        (0.2   )
Net cash used in financing activities                 (9.5   )        (11.3  )
                                                                      
Net increase (decrease) in cash and cash              (1.8   )        3.0
equivalents
Cash and cash equivalents at beginning of year        17.0           17.6   
Cash and cash equivalents at end of the quarter     $ 15.2           20.6   
                                                                             
                                                                             

AFC Enterprises, Inc.
Same-store sales and restaurant count
                                                   
                            12 Weeks ended              Year-to-date
                            7/14/2013   7/8/2012      7/14/2013   7/8/2012
Same-store sales growth                                            
Company-operated            1.7%          7.8%           2.5%          5.5%
restaurants
Domestic franchised         4.3%          8.4%           4.5%          8.3%
restaurants
Total domestic
(company-operated and       4.3%          8.4%           4.4%          8.2%
franchised restaurants)
International               5.8%          0.9%           4.8%          1.8%
franchised restaurants
Total global system         4.4%          7.5%           4.5%          7.5%
                                                                       
Company-operated
restaurants (all
domestic)
Restaurants at              46            40             45            40
beginning of quarter
New restaurant openings     2             -              3             -
Permanent closings          (1)           -             (1)          -
Restaurants at end of       47            40             47            40
quarter
                                                                       
Franchised restaurants
(domestic)
Restaurants at              1,650         1,589          1,634         1,587
beginning of quarter
New restaurant openings     27            13             49            24
Permanent closings          (5)           (1)            (12)          (9)
Temporary
(closings)/re-openings,     2             (4)           3            (5)
net
Restaurants at end of       1,674         1,597          1,674         1,597
quarter
                                                                       
Franchised restaurants
(international)
Restaurants at              423           415            425           408
beginning of quarter
New restaurant openings     15            12             32            27
Permanent closings          (10)          (15)           (27)          (24)
Temporary
(closings)/re-openings,     4             -             2            1
net
Restaurants at end of       432           412            432           412
quarter
                                                                       
Total restaurant count      2,153         2,049         2,153        2,049
at end of quarter
                                                                       
                                                                       

Management’s Use of Non-GAAP Financial Measures

Adjusted earnings per diluted share, Operating EBITDA, Company-operated
restaurant operating profit 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 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. Adjusted
earnings per diluted share, Operating EBITDA, Company-operated restaurant
operating profit and Free cash flow as calculated by the Company are not
necessarily comparable to similarly titled measures reported by other
companies. In addition, Adjusted earnings per diluted share, Operating EBITDA,
Company-operated restaurant operating profit and Free cash flow: (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:

  *second quarter and year-to-date 2013 and 2012 are comprised of asset write
    downs offset by 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 of asset write downs and
    $0.1 million of hurricane-related expenses, net;

(ii) for second quarter 2012 year-to-date approximately $0.5 million in legal
fees related to licensing arrangements; and

(iii) the tax effect of these adjustments at the effective statutory rates.

Adjusted earnings per diluted share provides the per share effect of adjusted
earnings on a diluted basis. The following table reconciles on a historical
basis for second quarter 2013, second quarter 2012, second quarter
year-to-date 2013, second quarter year-to-date 2012 and fiscal year 2012, the
Company’s Adjusted earnings per diluted share on a consolidated basis to the
line on its Condensed Consolidated Statements of Operations entitled Net
income, which the Company believes is the most directly comparable GAAP
measure on its Condensed Consolidated Statements of Operations.

                                                             
(in millions, except    Q2     Q2     Year-to-date  Year-to-date  Fiscal
per share data)         2013   2012   7/14/2013     7/8/2012      2012
Net income                $8.5    $6.6    $18.1          $14.9          $30.4
Other expense             -       0.1     0.1            0.1            (0.5)
(income), net
Legal fees related to
licensing                 -       -       -              0.5            0.5
arrangements
Tax effect              -      (0.1)  (0.1)         (0.3)         -
Adjusted earnings       $8.5   $6.6   $18.1         $15.2         $30.4
Adjusted earnings per   $0.35  $0.27  $0.75         $0.62         $1.24
diluted share
Weighted average
diluted shares          24.1   24.4   24.2          24.5          24.5
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 second quarter year-to-date 2013 and second quarter
year-to-date 2012, the Company’s Operating EBITDA on a consolidated basis to
the line on its Condensed Consolidated Statements of Operations entitled Net
income, which the Company believes is the most directly comparable GAAP
measure on its Condensed Consolidated Statements of Operations. Operating
EBITDA margin is defined as Operating EBITDA divided by Total revenues.

                                                            
(in millions)                                  Year-to-date   Year-to-date
                                               7/14/2013      7/8/2012
Net income                                       $18.1            $14.9
Interest expense, net                            2.0              2.0
Income tax expense                               10.6             8.7
Depreciation and amortization                    3.3              2.4
Other expenses (income), net                     0.1              0.1
Legal fees related to licensing arrangements   -             0.5      
Operating EBITDA                               $34.1         $28.6    
Total revenues                                 $108.3        $92.4    
Operating EBITDA margin                        31.5     %     31.0     %

Company-operated restaurant operating profit: Calculation and Definition

The Company defines 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 second quarter 2013, second quarter 2012,
second quarter year-to-date 2013 and second quarter year-to-date 2012,
Company-operated restaurant operating profit to the line item on its Condensed
Consolidated Statements of Operations entitled Sales by company-operated
restaurants, which the Company believes is the most directly comparable GAAP
measure on its Condensed Consolidated Statements of Operations.
Company-operated restaurant operating profit margin is defined as
Company-operated restaurant operating profit divided by Sales of
Company-operated restaurants.

                                                             
                                                      Year-to-   Year-to-
(in millions)                         Q2 2013   Q2 2012   date        date
                                                    7/14/2013  7/8/2012
Sales by company-operated             $17.5     $14.3     $41.4       $34.1
restaurants
Restaurant employee, occupancy        8.5       7.0       19.8        16.4
and other expenses
Restaurant food, beverages and      5.8     4.8     13.7      11.4   
packaging
Company-operated restaurant         $3.2    $2.5    $7.9      $6.3   
operating profit
Company-operated restaurant         18.3  %  17.5  %  19.1    %  18.5   %
operating profit 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 second quarter year-to-date 2013 $1.2 million
in Company-operatedrestaurant reimages, $0.6 million of information
technology projects and $0.7 million in other capital assets to maintain,
replace and extend the lives of Company-operated restaurant facilities and
equipment; and for second quarter year-to-date 2012 $0.6 million in
Company-operated restaurant reimages, $0.4 million of information technology
projects and $0.6 million in other capital assets to maintain, replace and
extend the lives of Company-operated restaurant facilities and equipment.

The following table reconciles on a historical basis for the second quarter
year-to-date 2013 and second quarter year-to-date 2012, the Company’s Free
cash flow on a consolidated basis to the line on its Condensed Consolidated
Statements of Operations entitled Net income, which the Company believes is
the most directly comparable GAAP measure on its Condensed Consolidated
Statements of Operations. Free cash flow margin is defined as Free cash flow
divided by Total revenue.

                                                
(in millions)                      Year-to-date   Year-to-date
                                   7/14/2013      7/8/2012
Net income                           $18.1            $14.9
Depreciation and amortization        3.3              2.4
Stock-based compensation expense     2.9              2.5
Maintenance capital expenditures   (2.5     )     (1.6     )
Free cash flow                     $21.8         $18.2    
Total revenue                      $108.3        $92.4    
Free cash flow margin              20.1     %     19.7     %

Forward-Looking Statement: Certain statements in this Press 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 and commodity costs, expectations
regarding restaurant reimaging, 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, capital expenditures and adjusted earnings per
diluted share, 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 2010 Credit Facility, our ability to comply with the repayment
requirements, covenants, tests and restrictions contained in our 2010 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 the Company’s 2012 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:

Investor inquiries:
AFC Enterprises, Inc.
Rebecca Gardy, Director, Finance & Investor Relations
404-459-4673 or investor.relations@afce.com
or
Media inquiries:
Coltrin & Associates, Inc.
Jennifer Webb, Senior Vice President, Operations
212-221-1616 ext. 111 or jennifer_webb@coltrin.com
 
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