Arcos Dorados Reports Fourth Quarter & Full Year 2013 Financial Results

2014-03-11
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  • Restaurant News Resource Revenues totaled $1.05 billion, an increase of 3.6% or 15.8% on an organic basis year-over-year, as double-digit comparable sales growth and the contribution from new restaurants more than offset local currency depreciation.

    Arcos Dorados Holdings, Inc. (NYSE:ARCO) (“Arcos Dorados” or the “Company”), Latin America’s largest restaurant chain and the world’s largest McDonald’s franchisee, today reported unaudited results for the fourth quarter and audited results for the full year ended December 31, 2013.

    Fourth Quarter 2013 Highlights

    • Revenues totaled $1.05 billion, an increase of 3.6% or 15.8% on an organic basis year-over-year, as double-digit comparable sales growth and the contribution from new restaurants more than offset local currency depreciation.
    • Systemwide comparable sales increased by 10.6% year-over-year.
    • Adjusted EBITDA increased by 5.7% to $118.0 million, on an as reported basis. Excluding currency translation and special items, Adjusted EBITDA was 20.0% higher year-over-year.
    • Net income was $32.1 million compared to $44.2 million one year ago, mainly due to a one-time charge related to the full redemption of the 2019 Notes, included within “Net interest expense”. Organic net income grew by 25.5%.

    Full Year 2013 Highlights

    • Revenues amounted to $4.03 billion, a 6.2% year-over-year increase or 16.7% rise on an organic basis, as double-digit comparable sales growth and revenues from new restaurants more than offset local currency depreciation.
    • Systemwide comparable sales increased by 11.2% year-over-year.
    • 130 new restaurants opened in 2013 and contributed to the overall restaurant count of 2,062. Capital expenditures for the year totaled $313.5 million.
    • Adjusted EBITDA improved versus the prior year and totaled $344.5 million, increasing 1.1%, or 18.7% on an organic basis.
    • The Company reported net income of $53.9 million, down from $114.3 million one year ago. The results mainly reflect higher foreign currency exchange losses and higher net interest expense, primarily due to one-time charges related to the debt restructuring in both 3Q13 and 4Q13. On an organic basis, net income increased by 16.2% to $103.4 million.

    “I am pleased to report double-digit growth in our consolidated operating results for both the fourth quarter and full year 2013. Despite an economic deceleration in a number of key markets, revenue growth was solidly in line with guidance. Adjusted EBITDA exceeded our annual target, due to G&A leverage and proactive currency hedging.”

    “We remain the dominant player in the industry, with an unparalleled restaurant portfolio. From this position of strength, and in response to a deterioration in the operating environment, we are adjusting the pace of our unit expansion for 2014. Nevertheless, we expect double-digit top line growth in 2014 and a higher baseline level of operating profitability as we focus on expanding market share, maximizing traffic and containing costs.”

    “Our 30-year history in the region equips us with tested strategies to improve operating results in challenging market conditions. As the largest franchisee of one of the world’s most iconic brands in an underpenetrated region, I remain confident in the Company’s long-term prospects,” said Woods Staton, Chairman and Chief Executive Officer of Arcos Dorados.

    Fourth Quarter 2013 Results

    Consolidated

       
    Financial Highlights (Million US$)
      Special   Currency   Organic      
    4Q12 Items Translation Growth 4Q13 % As
        (a)   (b)   (c)   (d)   (a+b+c+d)   Reported   % Organic
    Total Restaurants 1,948 2,062
    Sales by Company-operated Restaurants 965.1 (117.8) 153.6 1001.0 3.7% 15.9%
    Revenues from franchised restaurants   44.5       (5.5)   6.0   45.0   1.1%   13.4%
    Total Revenues   1009.7       (123.3)   159.6   1046.0   3.6%   15.8%
    Systemwide Comparable Sales                       10.6%    
    Adjusted EBITDA   111.6   1.5   (15.5)   20.4   118.0   5.7%   20.0%
    Adjusted EBITDA Margin 11.1% 11.3% 2.1%
    Net Income attributable to AD 44.2 (13.5) (7.5) 8.8 32.1 -27.4% 25.5%
    No. of shares outstanding ('000)   209,529               209,867        
    EPS ($ per share)   0.21               0.15        

    (4Q13 = 4Q12 + Special items + Currency translation + Organic growth). Please refer to “Definitions” section for further detail.

    Arcos Dorados’ fourth quarter revenues increased by 3.6% to $1.05 billion, as organic revenue growth of 15.8% was partially offset by depreciation of local currencies, mainly in Brazil, Venezuela and Argentina. Strong organic revenue growth was driven by a 10.6% expansion in systemwide comparable sales and a contribution of $58.5 million in constant currency from the net addition of 114 restaurants during the last 12-month period. The Caribbean division and SLAD reported double-digit increases in comparable sales and organic revenues.

    Marketing activities in the fourth quarter included strong promotions in the Company’s value platform across the region, and the successful launch of premium products such as the Cheddar Bacon Onion, and campaigns including Dijon and Tabasco. The Dessert category also outperformed internal targets.

    Adjusted EBITDA for the fourth quarter was $118.0 million, representing a 5.7% increase compared to the same period of 2012. Adjusting for special items and currency impact, organic adjusted EBITDA grew by 20.0%, supported by double-digit comparable sales growth, the contribution from new restaurants and 85 basis points of organic G&A leverage.

    Special items impacting Adjusted EBITDA consisted of:

    I. Please refer to 4Q12 earnings release.

    II. Employee meals program in Brazil.

    III. Compensation expense. Includes the result from the total equity return swap entered into 3Q12 to hedge the expense.

    The reported Adjusted EBITDA margin as a percentage of total revenues increased over 20 basis points to 11.3%, compared to the fourth quarter of 2012. All divisions except the Caribbean achieved improved margins versus the previous year. Additionally, reported G&A as a percentage of revenues decreased by 105 basis points compared to the year-ago period.

    Net income attributable to the Company was $32.1 million in the fourth quarter of 2013, compared to $44.2 million in the same period of 2012. The result reflects improved operating and foreign exchange results, which were more than offset by higher net interest expense, losses from derivative instruments and increased income tax recognized in the quarter.

    Non-operating Results

    Non-operating results for the quarter reflected (i) an increase in net interest and derivative instrument expenses, mainly attributable to a $10.8 million one-time charge related to the full redemption of the 2019 Notes, a $4.2 million loss incurred in connection with the unwind of the cross currency swap, and $2.9 million of additional interest year-over-year on incremental debt, and (ii) a foreign currency exchange loss of $3.5 million compared with a higher loss of $5.3 million in 4Q12.

    Income tax expense for the quarter totaled $21.3 million, resulting in an effective tax rate of 39.8% for the quarter, compared to 26.2% in the year-ago period. The higher 4Q13 effective tax rate was mainly explained by the reversal of certain valuation allowances over deferred tax assets in 4Q12 and by a one-time charge related to the full redemption of the 2019 Notes, that reduced income before taxes in 4Q13.

    The Company reported basic earnings per share (EPS) of $0.15 in the fourth quarter of 2013, compared to $0.21 in the previous corresponding period.

    Analysis by Division:

    Brazil Division

    Brazil revenues declined by 1.1% in the fourth quarter, however, excluding an 11% year-over-year average depreciation in the Brazilian Real, organic revenues grew by 9.5%. Product mix management and menu board adjustments drove a 2.2% increase in systemwide comparable sales. Throughout the year, the Company implemented a successful marketing calendar, which in the fourth quarter included the Tabasco Campaign and the addition of the Double Bacon sandwich in the GPPP value platform.

    While the Company continued to gain market share, supported by brand strength and compelling marketing initiatives, performance in Brazil was affected by a soft consumption environment.

    The net addition of 81 restaurants during the last 12-month period contributed $32.8 million to revenues in constant currency during the quarter. The openings brought the year-end restaurant total to 812.

    Adjusted EBITDA decreased by 0.3% in the fourth quarter of 2013. Reported Adjusted EBITDA margin increased by 14 basis points to 17.2% and was driven by reduced payroll costs and G&A expenses, mainly as a consequence of the reversal of the PAT provision.

    Special items impacting Adjusted EBITDA in the quarter included the reversal of the PAT provision in 4Q13 (compared to a charge in 4Q12) and the recovery of tax credits from prior periods in 4Q12. Excluding currency movements and the aforementioned special items, fourth quarter organic Adjusted EBITDA increased by 13.5%, driven by revenue growth and G&A leverage.

    NOLAD

    NOLAD’s revenues grew by 0.9% or 1.2% on an organic basis, year-over-year. Systemwide comparable sales declined by 2.3%, mainly affected by a weak consumer environment in Mexico and Costa Rica. Additionally, the net addition of 4 restaurants during the last 12-month period contributed $3.6 million to revenues in constant currency.

    Adjusted EBITDA increased by 6.0% to $9.6 million, from $9.1 million in the previous corresponding period. The reported Adjusted EBITDA margin increased by 45 basis points to 9.4%, due to lower Food and Paper and Occupancy & Other Operating Expenses as a percentage of revenues. On an organic basis, Adjusted EBITDA increased by 6.3%.

    SLAD

    SLAD’s revenues grew by 5.5% or 26.9% on an organic basis (excluding currency movements, mainly the devaluation of the Argentine Peso) compared to the fourth quarter of 2012. During the quarter, systemwide comparable sales increased by 21.3% on stable volumes. The Company implemented a successful marketing calendar, including the addition of the Premium Angus Burger line and Chicken McWraps to the Flavors Festival campaign, as well as the launch of McFlurry Vauquita in the Dessert category in Argentina. The net addition of 17 restaurants during the last 12-month period contributed $14.5 million to revenues in constant currency in the quarter.

    Adjusted EBITDA increased by 12.7% year-over-year, or 39.2% on an organic basis, resulting in an Adjusted EBITDA margin of 11.9%. The 76 basis points margin expansion was supported by leverage in F&P and payroll costs. These factors were partially offset by higher Occupancy and Other Operating Expenses as a percentage of revenues.

    Caribbean Division

    The Caribbean division reported revenue growth of 14.0% in the fourth quarter of 2013. Excluding currency movements (mainly the devaluation of the Venezuelan Bolivar), organic revenues increased by 26.1% compared to the fourth quarter of 2012. Systemwide comparable sales increased by 27.2%, driven by average check. Despite ongoing challenging conditions in Venezuela, brand preference remained strong. The Company maintained its leading market share through the execution of a strong marketing calendar, including the Cheddar Bacon Onion (beef and chicken), and the launch of McFlurry Tres Leches and McFlurry Flaquito Chocolate in the Dessert category. The net addition of 12 restaurants during the last 12-month period contributed $7.7 million to revenues in constant currency.

    Adjusted EBITDA grew by 0.2% and amounted to $24.5 million in 4Q13. The Adjusted EBITDA margin declined 146 basis points to 10.6%, driven by higher payroll costs and new legislation on rents in Venezuela, which more than offset efficiencies in all other costs items in the division. Special items impacting Adjusted EBITDA included the recognition of a royalty waiver from McDonald’s Corporation of $2.0 million in 4Q13, versus $1.2 million in 4Q12. On an organic basis, Adjusted EBITDA increased by 14.0% compared to the year-ago period.

    New Unit Development

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

    Note: Information for SLAD and Caribbean reflects the new division restructuring

    The Company completed 130 restaurant openings for the year ended December 31, 2013. The openings brought the year-end total to 2,062 restaurants. Also in 2013, the Company added 317 dessert centers and 20 McCafés, bringing the total to 2,259 and 348 respectively.

    Balance Sheet & Cash Flow Highlights

    Cash and cash equivalents were $175.6 million at December 31, 2013. The Company’s total financial debt (including derivative instruments) was $785.0 million. Net debt was $609.4 million and the Net Debt/Adjusted EBITDA ratio was 1.8x at December 31, 2013.

    Cash generated from operating activities was $133.5 million in the fourth quarter of 2013, while cash used in financing activities amounted to $130.8 million. During the quarter, capital expenditures amounted to $164.3 million, including a $57.4 million real estate purchase in Venezuela.

    Full Year 2013

    For the full year ended December 31, 2013, the Company’s revenues reached $4.03 billion, up 6.2% or 16.7% on an organic basis. Systemwide comparable sales grew by 11.2%, supported by positive contributions from Brazil, SLAD and the Caribbean division.

    Adjusted EBITDA was broadly stable year-over-year, increasing by 1.1% to $344.5 million. The Adjusted EBITDA margin contracted 43 basis points year-over-year to 8.5%, driven by higher F&P (due to the impact of the devaluation of local currencies on dollar-linked costs, mainly in Venezuela) and payroll costs as a percentage of sales, which more than offset lower G&A as a percentage of revenues.

    On an organic basis, Adjusted EBITDA increased by 18.7%, driven by solid growth in Brazil and SLAD, while the organic Adjusted EBITDA margin increased by 14 basis points year-over-year, supported by 72 basis points of leverage in organic G&A.

    Special items impacting the year-over-year change in Adjusted EBITDA consisted of:

    I. Please refer to 4Q12 earnings release.

    II. Employee meals program in Brazil.

    III. Compensation expense. Includes the result from the total equity return swap entered into 3Q12 to hedge the expense.

    For the full year 2013, consolidated net income attributable to the Company amounted to $53.9 million, compared with $114.3 million registered in 2012. The decline primarily reflects higher foreign currency exchange losses (explained by the depreciation of local currencies, including the devaluation of the Bolivar in Venezuela), and also higher net interest expense (primarily due to one-time charges related to the debt restructuring), all of which were partially offset by slightly lower income tax expense. The effective tax rate was 44.2% in 2013, compared to 28.8% in 2012, and was impacted by the aforementioned one-time charges affecting net interest expense, as well as the loss incurred as a result of the devaluation in Venezuela, all of which have no related tax benefits. Excluding the impact of such charges, the effective tax rate would have remained at the low end of guidance. On an organic basis, net income was $103.4 million, increasing by 16.2%.

    Cash generated by operating activities was $217.0 million for the year, while cash provided by financing activities amounted to $102.3 million. Additionally, total capital expenditures amounted to $313.5 million for the year, which includes a $57.4 million real estate purchase in Venezuela.

    2014 Guidance

    The Company’s outlook for full year 2014 growth versus 2013 is provided on an organic basis (constant currency and excluding special items in both years). Guidance for 2014 also excludes the Venezuelan business, as explained below.

    The increasingly complex operating environment in Venezuela has reduced the degree of certainty with respect to full year projections for the Venezuelan operation.

    Importantly, the Company believes that its Venezuelan business will not require operating cash support during the 2014 calendar year. Please refer to the Company’s Form 6-K filed with the SEC today, which provides Venezuela’s revenue and operating income for 2011, 2012 and 2013.

    Quarter Highlights & Recent Developments

    Restaurant opening target for 2014-2016

    The Company agreed with McDonald’s Corporation on February 11, 2014, to open a minimum of 250 restaurants during the 3-year period from 2014 to 2016.

    Full redemption of 2019 Notes

    In December 2013, the Company exercised its option to redeem all of the outstanding principal amount of Arcos Dorados B.V. 7.50% Senior Notes due 2019 at a redemption price equal to 109.129% of the principal amount of the Notes, plus accrued and unpaid interest. The transaction resulted in a one-time, non-operating charge of $10.8 million in net interest expense, which was recognized in the fourth quarter of 2013.

    Reversal of the PAT provision in Brazil

    After being notified of the confirmation of a preliminary ruling issued in October of 2013 by Brazilian authorities in favor of the Company regarding an employee meals program, also known as Programa de Alimentação do Trabalhador (PAT), in 4Q13 the Company reversed a provision that was in place from August 2012 through September 2013. The reversal amounted to $9.1 million and, combined with lower payroll costs in 4Q13 when compared to 4Q12, resulted in a 4Q13 benefit of $11.1 million year-over-year. The ruling will result in reduced payroll costs going forward.

    Dividend

    On January 3, 2014, the Company paid the fourth installment of its 2013 Dividends. The total amount paid was $12.5 million or $0.0596 per share on outstanding Class A and Class B shares, thus completing a total payment for the year of $50.0 million or $0.24 per share for the full year 2013.

    Daniel Schleiniger Appointed as Investor Relations Director

    Daniel Schleiniger joined the Company as the new Corporate Director of Investor Relations. Daniel began his career as a corporate banking relationship manager for one of Brazil’s largest banks and has held positions in equity research, investor relations, financial planning and analysis as well as treasury and portfolio management. Daniel holds a bachelor of science degree in chemistry from the University of Delaware (USA) and an MBA in Finance from the same academic institution. Daniel will be based in Miami.

    Annual General Shareholders Meeting

    On March 6, 2014, the Board set the date for the Company’s Annual General Shareholders’ Meeting. The AGM will be held on April 21, 2014, in Bogotá, Colombia, at 10:00 a.m. (local time), to all shareholders as of record on March 19, 2014.

    Definitions:

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

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

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

    About Arcos Dorados

    Arcos Dorados is the world’s largest McDonald’s franchisee in terms of systemwide sales and number of restaurants, operating the largest quick service restaurant (“QSR”) chain in Latin America and the Caribbean. It has the exclusive right to own, operate and grant franchises of McDonald’s restaurants in 20 Latin American and Caribbean countries and territories, including Argentina, Aruba, Brazil, Chile, Colombia, Costa Rica, Curaçao, Ecuador, French Guyana, Guadeloupe, Martinique, Mexico, Panama, Peru, Puerto Rico, St. Croix, St. Thomas, Trinidad & Tobago, Uruguay and Venezuela. The Company operates or franchises 2,062 McDonald’s-branded restaurants with over 90,000 employees serving approximately 4.3 million customers a day, as of December 2013. Recognized as one of the best companies to work for in Latin America, Arcos Dorados is traded on the New York Stock Exchange (NYSE: ARCO).

    Use of Non-GAAP Financial Measures

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

     
    Fourth Quarter & Full Year 2013 Consolidated Results

    (In thousands of U.S. dollars, except per share data)

     
    For Three-Months ended For Twelve-Months ended
    Dec 31, Dec 31,
    2013   2012 2013   2012
    REVENUES
    Sales by Company-operated restaurants 1,000,966 965,142 3,859,883 3,634,371
    Revenues from franchised restaurants   45,037   44,535   173,427   163,023
    Total Revenues   1,046,003   1,009,677   4,033,310   3,797,394
    OPERATING COSTS AND EXPENSES
    Company-operated restaurant expenses:
    Food and paper (342,959) (333,338) (1,350,515) (1,269,146)
    Payroll and employee benefits (198,994) (198,094) (814,112) (753,120)
    Occupancy and other operating expenses (268,646) (258,633) (1,055,188) (984,004)
    Royalty fees (49,154) (47,948) (188,885) (180,547)
    Franchised restaurants - occupancy expenses (15,620) (14,860) (63,273) (56,057)
    General and administrative expenses (77,473) (85,414) (317,745) (314,619)
    Other operating (expenses) income, net   (2,474)   8,705   (15,070)   (3,261)
    Total operating costs and expenses   (955,320)   (929,582)   (3,804,788)   (3,560,754)
    Operating income   90,683   80,095   228,522   236,640
    Net interest expense (29,585) (14,496) (88,156) (54,247)
    (Loss) Gain from derivative instruments (4,099) 146 (4,141) (891)
    Foreign currency exchange results (3,528) (5,349) (38,783) (18,420)
    Other non-operating income (expenses), net   10   (396)   (848)   (2,119)
    Income before income taxes   53,481   60,000   96,594   160,963
    Income tax expense   (21,298)   (15,703)   (42,722)   (46,375)
    Net income   32,183   44,297   53,872   114,588
    Less: Net income attributable to non-controlling interests   (93)   (76)   (18)   (256)
    Net income attributable to Arcos Dorados Holdings Inc.   32,090   44,221   53,854   114,332
    Earnings per share information ($ per share):            
    Basic net income per common share $ 0.15   $ 0.21 $ 0.26   $ 0.55
    Weighted-average number of common shares outstanding-Basic   209,867,426   209,529,412   209,754,176   209,529,412
    Adjusted EBITDA Reconciliation
    Operating income 90,683 80,095 228,522 236,640
    Depreciation and amortization 28,381 27,022 114,860 92,328
    Operating (income) charges excluded from EBITDA computation   (1,069)   4,490   1,085   11,593
    Adjusted EBITDA   117,995   111,607   344,467   340,561
    Adjusted EBITDA Margin as % of total revenues 11.3% 11.1% 8.5% 9.0%
     
     
    Fourth Quarter & Full Year 2013 Results by Division

    (In thousands of U.S. dollars)

     
      4Q       FY
    Three-Months ended   % Incr.   Constant Twelve-Months ended   % Incr.   Constant
    Dec 31, / Curr. Dec 31, / Curr.
    2013   2012   (Decr.)   Incr/(Decr) % 2013   2012   (Decr.)   Incr/(Decr) %

    Revenues

       
    Brazil 477,834 483,102 -1.1% 9.5% 1,842,324 1,797,556 2.5% 13.3%
    Caribbean 230,907 202,466 14.0% 26.1% 830,447 754,730 10.0% 19.7%
    NOLAD 102,449 101,528 0.9% 1.2% 407,772 384,041 6.2% 4.3%
    SLAD 234,813   222,581   5.5%   26.9% 952,767 861,067 10.6% 26.7%
    TOTAL 1,046,003   1,009,677   3.6%   15.8% 4,033,310 3,797,394 6.2% 16.7%
     
     

    Operating Income

    Brazil 70,731 69,683 1.5% 12.9% 188,445 193,339 -2.5% 8.0%
    Caribbean 14,846 14,906 -0.4% 23.8% 37,837 40,692 -7.0% 12.7%
    NOLAD (471) (3,568) -86.8% -86.0% (5,314) (5,557) 4.4% 13.5%
    SLAD 23,790 19,463 22.2% 53.0% 84,324 74,824 12.7% 33.6%
    Corporate and Other (18,213)   (20,389)   -10.7%   12.4% (76,770)   (66,658)   -15.2%   -37.8%
    TOTAL 90,683   80,095   13.2%   29.2% 228,522   236,640   -3.4%   9.0%
     
     

    Adjusted EBITDA

    Brazil 82,071 82,318 -0.3% 10.8% 245,957 240,954 2.1% 13.0%
    Caribbean 24,497 24,444 0.2% 16.3% 67,180 69,109 -2.8% 10.2%
    NOLAD 9,638 9,091 6.0% 6.3% 27,397 26,738 2.5% 1.9%
    SLAD 27,940 24,802 12.7% 39.2% 105,495 93,756 12.5% 31.6%
    Corporate and Other (26,151)   (29,048)   -10.0%   4.4% (101,562)   (89,996)   -12.9%   -27.8%
    TOTAL 117,995   111,607   5.7%   19.6% 344,467   340,561   1.1%   12.8%
     
                           

    Average Exchange Rate per Quarter

    Brazil Mexico Argentina
     
    4Q13 2.28 13.01 6.07
    4Q12         2.06       12.95       4.80

    Local $ per 1 US$

       
    Summarized Consolidated Balance Sheets
    (In thousands of U.S. dollars)
     
           
      December 31, 2013   December 31, 2012
             
    ASSETS
    Current assets
    Cash and cash equivalents 175,648 184,851
    Accounts and notes receivable, net 110,696 105,019
    Other current assets (1) 380,107 311,628
    Total current assets 666,451 601,498
    -
    Non-current assets
    Property and equipment, net 1,244,311 1,176,350
    Net intangible assets and goodwill 70,375 67,271
    Deferred income taxes 97,687 133,708
    Other non-current assets (2) 101,435 70,336
    Total non-current assets   1,513,808   1,447,665
    Total assets   2,180,259   2,049,163
    LIABILITIES AND EQUITY
    Current liabilities
    Accounts payable 311,060 244,365
    Taxes payable (3) 137,492 125,713
    Accrued payroll and other liabilities 141,970 150,690
    Other current liabilities (4) 52,562 50,845
    Provision for contingencies 1,748 507
    Financial debt (5) 14,324 6,154
    Total current liabilities 659,156 578,274
    Non-current liabilities
    Accrued payroll and other liabilities 35,446 40,115
    Provision for contingencies 13,074 20,092
    Financial debt (5) 771,171 655,365
    Deferred income taxes 6,113 9,007
    Total non-current liabilities   825,804   724,579
    Total liabilities   1,484,960   1,302,853
    Equity
    Class A shares of common stock 358,820 351,654
    Class B shares of common stock 132,915 132,915
    Additional paid-in capital 17,250 18,634
    Retained earnings 404,287 400,761
    Accumulated other comprehensive losses   (218,735)   (158,821)
    Total Arcos Dorados Holdings Inc shareholders’ equity   694,537   745,143
    Non-controlling interest in subsidiaries   762   1,167
    Total equity   695,299   746,310
    Total liabilities and equity   2,180,259   2,049,163

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

    (2) Includes "Miscellaneous", "Collateral deposits", "Derivative instruments" and "McDonald´s Corporation´ indemnification for contingencies".

    (3) Includes "Income taxes payable" and "Other taxes payable".

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

    (5) Includes "Short-term debt", "Long-term debt" and "Derivative instruments"

       

    Consolidated Financial Ratios

    (In thousands of U.S. dollars, except ratios)

     
    As of As of
    December 31, December 31,
        2013   2012
    Cash & cash equivalents 175,648 184,851
    Total Financial Debt (i) 785,005 659,788
    Net Financial Debt (ii) 609,357 474,937
    Total Financial Debt / LTM Adjusted EBITDA ratio 2.3 1.9
    Net Financial Debt / LTM Adjusted EBITDA ratio 1.8 1.4

    (i) Total financial debt includes short-term debt, long-term debt and derivative instruments (including the asset portion of derivatives amounting to $0.5 million and $1.7 million as a reduction of financial debt as of December 31, 2013 and 2012, respectively).

    (ii) Total financial debt less cash and cash equivalents.



    Logos, product and company names mentioned are the property of their respective owners.

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