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REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
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x
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the fiscal year ended December 31, 2012
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OR
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the transition period from ________________ to ________________
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SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Date of event requiring this shell company report
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Commission file number: 001-35129
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Title of each class
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Name of each exchange on which registered
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Class A shares, no par value
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New York Stock Exchange
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US GAAP
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International Financial Reporting Standards as issued by the International Accounting Standards Board
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Other
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124
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125
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general economic, political, demographic and business conditions in Latin America and the Caribbean;
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·
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fluctuations in inflation and exchange rates in Latin America and the Caribbean;
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·
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our ability to implement our growth strategy;
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·
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the success of operating initiatives, including advertising and promotional efforts and new product and concept development by us and our competitors;
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·
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our ability to compete and conduct our business in the future;
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·
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changes in consumer tastes and preferences, including changes resulting from concerns over nutritional or safety aspects of beef, poultry, french fries or other foods or the effects of health pandemics and food-borne illnesses such as “mad cow” disease and avian influenza or “bird flu,” and changes in spending patterns and demographic trends, such as the extent to which consumers eat meals away from home;
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·
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the availability, location and lease terms for restaurant development;
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·
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our intention to focus on our restaurant reimaging plan;
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·
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our franchisees, including their business and financial viability and the timely payment of our franchisees’ obligations due to us and to McDonald’s;
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·
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our ability to comply with the requirements of the MFAs, including McDonald’s standards;
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·
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our decision to own and operate restaurants or to operate under franchise agreements;
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·
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the availability of qualified restaurant personnel for us and for our franchisees, and the ability to retain such personnel;
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·
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changes in commodity costs, labor, supply, fuel, utilities, distribution and other operating costs;
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·
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our ability, if necessary, to secure alternative distribution of supplies of food, equipment and other products to our restaurants at competitive rates and in adequate amounts, and the potential financial impact of any interruptions in such distribution;
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·
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changes in government regulation;
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·
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other factors that may affect our financial condition, liquidity and results of operations; and
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·
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other risk factors discussed under “Item 3. Key Information—D. Risk Factors.”
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Arcos Dorados
|
||||||||||||||||||||
For the Years Ended December 31,
|
||||||||||||||||||||
2012
|
2011
|
2010
|
2009
|
2008
|
||||||||||||||||
(in thousands of U.S. dollars, except for share data)
|
||||||||||||||||||||
Income Statement Data:
|
||||||||||||||||||||
Sales by Company-operated restaurants
|
$ | 3,634,371 | $ | 3,504,128 | $ | 2,894,466 | $ | 2,536,655 | $ | 2,480,897 | ||||||||||
Revenues from franchised restaurants
|
163,023 | 153,521 | 123,652 | 128,821 | 125,945 | |||||||||||||||
Total revenues
|
3,797,394 | 3,657,649 | 3,018,118 | 2,665,476 | 2,606,842 | |||||||||||||||
Company-operated restaurant expenses:
|
||||||||||||||||||||
Food and paper
|
(1,269,146 | ) | (1,216,141 | ) | (1,023,464 | ) | (929,718 | ) | (902,305 | ) | ||||||||||
Payroll and employee benefits
|
(753,120 | ) | (701,278 | ) | (569,084 | ) | (491,214 | ) | (461,602 | ) | ||||||||||
Occupancy and other operating expenses
|
(984,004 | ) | (918,102 | ) | (765,777 | ) | (667,438 | ) | (647,152 | ) | ||||||||||
Royalty fees
|
(180,547 | ) | (170,400 | ) | (140,973 | ) | (121,901 | ) | (118,980 | ) | ||||||||||
Franchised restaurants—occupancy expenses
|
(56,057 | ) | (51,396 | ) | (37,634 | ) | (42,327 | ) | (42,416 | ) | ||||||||||
General and administrative expenses
|
(314,619 | ) | (334,914 | ) | (254,165 | ) | (189,507 | ) | (186,098 | ) | ||||||||||
Other operating expenses, net
|
(3,261 | ) | (14,665 | ) | (22,464 | ) | (16,562 | ) | (26,095 | ) | ||||||||||
Total operating costs and expenses
|
(3,560,754 | ) | (3,406,896 | ) | (2,813,561 | ) | (2,458,667 | ) | (2,384,648 | ) | ||||||||||
Operating income
|
236,640 | 250,753 | 204,557 | 206,809 | 222,194 | |||||||||||||||
Net interest expense
|
(54,247 | ) | (60,749 | ) | (41,613 | ) | (52,473 | ) | (26,272 | ) | ||||||||||
Loss from derivative instruments
|
(891 | ) | (9,237 | ) | (32,809 | ) | (39,935 | ) | (2,620 | ) | ||||||||||
Foreign currency exchange results
|
(18,420 | ) | (23,926 | ) | 3,237 | (14,098 | ) | (74,884 | ) | |||||||||||
Other non-operating (expenses) income, net
|
(2,119 | ) | 3,562 | (23,630 | ) | (1,240 | ) | (1,934 | ) | |||||||||||
Income before income taxes
|
160,963 | 160,403 | 109,742 | 99,063 | 116,484 | |||||||||||||||
Income tax expense
|
(46,375 | ) | (44,603 | ) | (3,450 | ) | (18,709 | ) | (12,067 | ) | ||||||||||
Net income
|
114,588 | 115,800 | 106,292 | 80,354 | 104,417 | |||||||||||||||
Less: Net income attributable to non-controlling interests
|
(256 | ) | (271 | ) | (271 | ) | (332 | ) | (1,375 | ) | ||||||||||
Net income attributable to Arcos Dorados Holdings Inc.
|
114,332 | 115,529 | 106,021 | 80,022 | 103,042 | |||||||||||||||
Earnings per share:
|
||||||||||||||||||||
Basic net income per common share attributable to Arcos Dorados Holdings Inc.
|
$ | 0.55 | $ | 0.54 | $ | 0.44 | $ | 0.33 | $ | 0.43 | ||||||||||
Diluted net income per common share attributable to Arcos Dorados Holdings Inc.
|
$ | 0.55 | $ | 0.54 | $ | 0.44 | $ | 0.33 | $ | 0.43 |
As of December 31,
|
||||||||||||||||||||
2012
|
2011
|
2010
|
2009
|
2008
|
||||||||||||||||
(in thousands of U.S. dollars, except for share data)
|
||||||||||||||||||||
Balance Sheet Data(1):
|
||||||||||||||||||||
Cash and cash equivalents
|
$ | 184,851 | $ | 176,301 | $ | 208,099 | $ | 167,975 | $ | 105,982 | ||||||||||
Total current assets
|
601,498 | 588,614 | 552,355 | 394,011 | 380,275 | |||||||||||||||
Property and equipment, net
|
1,176,350 | 1,023,180 | 911,730 | 785,862 | 709,667 | |||||||||||||||
Total non-current assets
|
1,447,665 | 1,286,792 | 1,231,911 | 1,088,937 | 923,488 | |||||||||||||||
Total assets
|
2,049,163 | 1,875,406 | 1,784,266 | 1,482,948 | 1,303,763 | |||||||||||||||
Accounts payable
|
244,365 | 220,941 | 217,326 | 151,175 | 148,884 | |||||||||||||||
Short-term debt and current portion of long-term debt
|
2,202 | 3,811 | 17,947 | 11,046 | 15,306 | |||||||||||||||
Total current liabilities
|
578,274 | 589,292 | 605,148 | 396,810 | 388,357 | |||||||||||||||
Long-term debt, excluding current portion
|
649,968 | 525,951 | 451,423 | 454,461 | 351,870 | |||||||||||||||
Total non-current liabilities
|
724,579 | 606,485 | 629,923 | 632,092 | 474,654 | |||||||||||||||
Total liabilities
|
1,302,853 | 1,195,777 | 1,235,071 | 1,028,902 | 863,011 | |||||||||||||||
Total common stock
|
484,569 | 484,569 | 377,546 | 377,546 | 377,546 | |||||||||||||||
Total equity
|
746,310 | 679,629 | 549,195 | 454,046 | 440,752 | |||||||||||||||
Total liabilities and equity
|
2,049,163 | 1,875,406 | 1,784,266 | 1,482,948 | 1,303,763 | |||||||||||||||
Shares outstanding(2)
|
209,529,412 | 209,529,412 | 241,882,966 | 241,882,966 | 241,882,966 |
For the Years Ended December 31,
|
||||||||||||||||||||
2012
|
2011
|
2010
|
2009
|
2008
|
||||||||||||||||
(in thousands of U.S. dollars, except percentages)
|
||||||||||||||||||||
Other Data:
|
||||||||||||||||||||
Total Revenues
|
||||||||||||||||||||
Brazil
|
$ | 1,797,556 | $ | 1,890,824 | $ | 1,595,571 | $ | 1,200,742 | $ | 1,237,208 | ||||||||||
Caribbean division
|
273,467 | 267,701 | 260,617 | 244,774 | 231,734 | |||||||||||||||
NOLAD
|
384,041 | 355,265 | 305,017 | 240,333 | 232,083 | |||||||||||||||
SLAD(3)
|
1,342,330 | 1,143,859 | 856,913 | 979,627 | 905,817 | |||||||||||||||
Total
|
3,797,394 | 3,657,649 | 3,018,118 | 2,665,476 | 2,606,842 | |||||||||||||||
Operating Income
|
||||||||||||||||||||
Brazil
|
$ | 193,339 | $ | 246,926 | $ | 208,102 | $ | 127,291 | $ | 102,819 | ||||||||||
Caribbean division
|
(5,020 | ) | (5,244 | ) | 11,189 | 10,448 | 12,454 | |||||||||||||
NOLAD
|
(5,557 | ) | (8,709 | ) | (16,718 | ) | (17,252 | ) | (4,863 | ) | ||||||||||
SLAD(3)
|
120,536 | 99,813 | 66,288 | 108,261 | 119,716 | |||||||||||||||
Corporate and others and purchase price allocation
|
(66,658 | ) | (82,033 | ) | (64,304 | ) | (21,939 | ) | (7,932 | ) | ||||||||||
Total
|
236,640 | 250,753 | 204,557 | 206,809 | 222,194 | |||||||||||||||
Operating Margin(4)
|
||||||||||||||||||||
Brazil
|
10.8 | % | 13.1 | % | 13.0 | % | 10.6 | % | 8.3 | % | ||||||||||
Caribbean division
|
(1.8 | ) | (2.0 | ) | 4.3 | 4.3 | 5.4 | |||||||||||||
NOLAD
|
(1.4 | ) | (2.5 | ) | (5.5 | ) | (7.2 | ) | (2.1 | ) | ||||||||||
SLAD(3)
|
9.0 | 8.7 | 7.7 | 11.1 | 13.2 | |||||||||||||||
Total
|
6.2 | 6.9 | 6.8 | 7.8 | 8.5 | |||||||||||||||
Adjusted EBITDA(5)
|
||||||||||||||||||||
Brazil
|
$ | 240,954 | $ | 289,462 | $ | 250,606 | $ | 160,037 | $ | 144,965 | ||||||||||
Caribbean division
|
12,345 | 9,493 | 23,556 | 21,167 | 22,013 | |||||||||||||||
NOLAD
|
26,738 | 19,551 | 15,400 | 3,918 | 15,961 | |||||||||||||||
SLAD(3)
|
150,520 | 121,475 | 83,998 | 129,889 | 138,683 | |||||||||||||||
Corporate and others
|
(89,996 | ) | (100,193 | ) | (74,446 | ) | (48,628 | ) | (33,648 | ) | ||||||||||
Total
|
340,561 | 339,788 | 299,114 | 266,383 | 287,974 | |||||||||||||||
Adjusted EBITDA Margin(6)
|
||||||||||||||||||||
Brazil
|
13.4 | % | 15.3 | % | 15.7 | % | 13.3 | % | 11.7 | % | ||||||||||
Caribbean division
|
4.5 | 3.5 | 9.0 | 8.6 | 9.5 | |||||||||||||||
NOLAD
|
7.0 | 5.5 | 5.0 | 1.6 | 6.9 | |||||||||||||||
SLAD(3)
|
11.2 | 10.6 | 9.8 | 13.3 | 15.3 | |||||||||||||||
Total
|
9.0 | 9.3 | 9.9 | 10.0 | 11.0 | |||||||||||||||
Other Financial Data:
|
||||||||||||||||||||
Working capital(7)
|
$ | 23,224 | $ | (678 | ) | $ | (52,793 | ) | $ | (2,799 | ) | $ | (8,082 | ) | ||||||
Capital expenditures(8)
|
300,482 | 325,852 | 176,173 | 101,166 | 167,893 | |||||||||||||||
Dividends declared per common share
|
$ | 0.24 | $ | 0.24 | $ | 0.17 | $ | — | $ | — | ||||||||||
Other Operating Data:
|
||||||||||||||||||||
Systemwide comparable sales growth(9)(10)
|
9.2 | % | 13.7 | % | 14.9 | % | 5.5 | % | — | |||||||||||
Brazil
|
5.2 | 9.3 | 17.5 | 2.7 | — | |||||||||||||||
Caribbean division
|
2.6 | (0.6 | ) | 4.7 | 4.2 | — | ||||||||||||||
NOLAD
|
4.4 | 8.5 | 9.1 | (1.7 | ) | — | ||||||||||||||
SLAD
|
19.9 | 29.6 | 16.1 | 12.2 | — | |||||||||||||||
Systemwide average restaurant sales(10)(11)
|
$ | 2,603 | $ | 2,648 | $ | 2,288 | $ | 2,147 | $ | 2,186 | ||||||||||
Systemwide sales growth(10)(12)
|
3.6 | % | 21.1 | % | 10.2 | % | 0.9 | % | — | |||||||||||
Brazil
|
(4.6 | ) | 19.2 | 34.3 | (2.4 | ) | — | |||||||||||||
Caribbean division
|
— | 1.4 | 3.8 | 4.6 | — | |||||||||||||||
NOLAD
|
5.9 | 14.9 | 19.2 | (12.3 | ) | — | ||||||||||||||
SLAD
|
18.6 | 34.5 | (20.2 | ) | 9.2 | — |
As of December 31,
|
||||||||||||||||||||
2012
|
2011
|
2010
|
2009
|
2008
|
||||||||||||||||
Number of systemwide restaurants
|
1,948 | 1,840 | 1,755 | 1,680 | 1,640 | |||||||||||||||
Brazil
|
731 | 662 | 616 | 578 | 564 | |||||||||||||||
Caribbean division
|
139 | 147 | 142 | 145 | 145 | |||||||||||||||
NOLAD
|
503 | 484 | 476 | 456 | 448 | |||||||||||||||
SLAD
|
575 | 547 | 521 | 501 | 483 | |||||||||||||||
Number of Company-operated restaurants
|
1,453 | 1,358 | 1,292 | 1,226 | 1,155 | |||||||||||||||
Brazil
|
533 | 488 | 453 | 432 | 426 | |||||||||||||||
Caribbean division
|
96 | 96 | 91 | 93 | 89 | |||||||||||||||
NOLAD
|
335 | 314 | 310 | 289 | 242 | |||||||||||||||
SLAD
|
489 | 460 | 438 | 412 | 398 | |||||||||||||||
Number of franchised restaurants
|
495 | 482 | 463 | 454 | 485 | |||||||||||||||
Brazil
|
198 | 174 | 163 | 146 | 138 | |||||||||||||||
Caribbean division
|
43 | 51 | 51 | 52 | 56 | |||||||||||||||
NOLAD
|
168 | 170 | 166 | 167 | 206 | |||||||||||||||
SLAD
|
86 | 87 | 83 | 89 | 85 |
(1)
|
The balance sheet data as of December 31, 2010, 2009 and 2008 does not reflect the split-off of the Axionlog business, formerly known as Axis. See “Item 4. Information on the Company—B. Business Overview—Our Operations—Supply and Distribution.”
|
(2)
|
Data as of December 2010, 2009 and 2008 was adjusted to reflect the stock split approved on March 14, 2011. See Note 22 to our consolidated financial statements for details.
|
(3)
|
Currency controls in Venezuela and related accounting changes have had a significant effect on our results of operations and impact the comparability of our results of operations in 2010 compared to 2009.
|
(4)
|
Operating margin is operating income divided by total revenues, expressed as a percentage.
|
(5)
|
Adjusted EBITDA is a measure of our performance that is reviewed by our management. Adjusted EBITDA does not have a standardized meaning and, accordingly, our definition of Adjusted EBITDA may not be comparable to Adjusted EBITDA as used by other companies. Total Adjusted EBITDA is a non-GAAP measure. For our definition of Adjusted EBITDA, see “Presentation of Financial and Other Information—Other Financial Measures.”
|
For the Years Ended December 31,
|
||||||||||||||||||||
Consolidated Adjusted EBITDA Reconciliation
|
2012
|
2011
|
2010
|
2009
|
2008
|
|||||||||||||||
(in thousands of U.S. dollars)
|
||||||||||||||||||||
Net income attributable to Arcos Dorados Holdings Inc.
|
$ | 114,332 | $ | 115,529 | $ | 106,021 | $ | 80,022 | $ | 103,042 | ||||||||||
Plus (Less):
|
||||||||||||||||||||
Net interest expense
|
54,247 | 60,749 | 41,613 | 52,473 | 26,272 | |||||||||||||||
Loss from derivative instruments
|
891 | 9,237 | 32,809 | 39,935 | 2,620 | |||||||||||||||
Foreign currency exchange results
|
18,420 | 23,926 | (3,237 | ) | 14,098 | 74,884 | ||||||||||||||
Other non-operating expenses (income), net
|
2,119 | (3,562 | ) | 23,630 | 1,240 | 1,934 | ||||||||||||||
Income tax expense
|
46,375 | 44,603 | 3,450 | 18,709 | 12,067 | |||||||||||||||
Net income attributable to non-controlling interests
|
256 | 271 | 271 | 332 | 1,375 | |||||||||||||||
Operating income
|
236,640 | 250,753 | 204,557 | 206,809 | 222,194 | |||||||||||||||
Plus (Less):
|
||||||||||||||||||||
Items excluded from computation that affect operating income:
|
||||||||||||||||||||
Depreciation and amortization
|
92,328 | 68,971 | 60,585 | 54,169 | 49,496 | |||||||||||||||
Compensation expense related to the award right granted to the CEO
|
— | 2,214 | 16,392 | 4,334 | 11,060 | |||||||||||||||
Gains from sale of property and equipment
|
(3,328 | ) | (7,123 | ) | (5,299 | ) | (8,465 | ) | (4,592 | ) | ||||||||||
Write-offs of property and equipment
|
4,259 | 3,570 | 2,635 | 9,434 | 5,144 | |||||||||||||||
Impairment of long-lived assets
|
1,982 | 1,715 | 4,668 | — | — | |||||||||||||||
Stock-based compensation related to the special awards in connection with the initial public offering under the 2011 Plan
|
7,997 | 5,703 | — | — | — | |||||||||||||||
Cash bonus related to the initial public offering
|
— | 1,382 | — | — | — | |||||||||||||||
Incremental compensation expense related to the Arcos Dorados B.V. long-term incentive plan
|
— | 10,526 | 15,576 | — | — | |||||||||||||||
Contract termination losses
|
— | — | — | — | 3,606 | |||||||||||||||
Impairment of goodwill
|
683 | 2,077 | — | 102 | 1,066 | |||||||||||||||
Adjusted EBITDA
|
340,561 | 339,788 | 299,114 | 266,383 | 287,974 |
(6)
|
Adjusted EBITDA margin is Adjusted EBITDA divided by total revenues, expressed as a percentage.
|
(7)
|
Working capital equals current assets minus current liabilities.
|
(8)
|
Includes property and equipment expenditures and purchase of restaurant businesses.
|
(9)
|
Systemwide comparable sales growth refers to the change in our restaurant sales in one period from a comparable period for restaurants that have been open for thirteen months or longer. Systemwide comparable sales growth is provided and analyzed on a constant currency basis, which means it is calculated using the same exchange rate over the periods under comparison to remove the effects of currency fluctuations from this trend analysis. We believe this constant currency measure provides a more meaningful analysis of our business by identifying the underlying business trend, without distortion from the effect of foreign currency movements.
|
(10)
|
Systemwide comparable sales growth, systemwide average restaurant sales and systemwide sales growth are presented on a systemwide basis, which means they include sales by our Company-operated restaurants and our franchised restaurants. 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.
|
(11)
|
Systemwide average restaurant sales is calculated by dividing our sales for the relevant period by the arithmetic mean of the number of our restaurants at the beginning and end of such period.
|
(12)
|
Systemwide sales growth refers to the change in sales by all of our restaurants, whether operated by us or by our franchisees, from one period to another.
|
Period-End
|
Average for Period
|
Low
|
High
|
|||||||||||||
(Argentine
pesos
per U.S. dollar)
|
||||||||||||||||
ARS$
|
ARS$
|
ARS$
|
ARS$
|
|||||||||||||
Year Ended December 31:
|
||||||||||||||||
2008
|
3.454 | 3.162 | 3.013 | 3.454 | ||||||||||||
2009
|
3.797 | 3.729 | 3.450 | 3.855 | ||||||||||||
2010
|
3.976 | 3.912 | 3.794 | 3.986 | ||||||||||||
2011
|
4.303 | 4.130 | 3.972 | 4.304 | ||||||||||||
2012
|
4.917 | 4.551 | 4.305 | 4.917 | ||||||||||||
Quarter Ended:
|
||||||||||||||||
March 31, 2013
|
5.147 | 5.028 | 4.923 | 5.147 |
Period-End
|
Average for Period
|
Low
|
High
|
|||||||||||||
(Argentine
pesos
per U.S. dollar)
|
||||||||||||||||
ARS$
|
ARS$
|
ARS$
|
ARS$
|
|||||||||||||
Month Ended:
|
||||||||||||||||
September 30, 2012
|
4.694 | 4.670 | 4.642 | 4.694 | ||||||||||||
October 31, 2012
|
4.766 | 4.730 | 4.699 | 4.766 | ||||||||||||
November 30, 2012
|
4.834 | 4.797 | 4.770 | 4.834 | ||||||||||||
December 31, 2012
|
4.917 | 4.880 | 4.840 | 4.917 | ||||||||||||
January 31, 2013
|
4.977 | 4.949 | 4.923 | 4.977 | ||||||||||||
February 28, 2013
|
5.045 | 5.011 | 4.983 | 5.045 | ||||||||||||
March 31, 2013
|
5.122 | 5.084 | 5.122 | 5.048 | ||||||||||||
April 30, 2013 (through April 24, 2013)
|
5.175 | 5.150 | 5.130 | 5.145 |
|
·
|
the funds may only be transferred outside the local exchange market after a 365-day period from the date of entry of the funds into Argentina;
|
|
·
|
any amounts resulting from the exchange of the funds are to be credited to an account within the Argentine banking system;
|
|
·
|
a non-transferable, non-interest-bearing deposit must be maintained for a term of 365 calendar days, in an amount equal to 30% of any inflow of funds to the local foreign exchange market; and
|
|
·
|
the deposit shall be in U.S. dollars in any of the financial entities of Argentina and may not be used as collateral or guaranty for any credit transaction. Any breach to the provisions of Decree 616/05 is subject to criminal penalties of the exchange regime.
|
|
(a)
|
up to 5 days in advance of the relevant interest payment date;
|
|
(b)
|
to pay interest accrued as from the date of settlement of the disbursed funds through the local foreign exchange market; or
|
|
(c)
|
to pay interest accrued during the period between the date of disbursement of the funds and the date of settlement of the disbursed funds through the local foreign exchange market; provided that the funds disbursed abroad were credited in correspondent accounts of entities authorized to settle such funds through the local exchange market, within 48 business hours as from the date of their disbursement (Communication “A” 5264, as amended by Communication “A” 5295, Communication “A” 5318, Communication “A” 5330, Communication “A” 5339, Communication “A” 5377 and Communication “A” 5397, “
Communication “A” 5264
”).
|
|
(a)
|
within 10 business days prior to the stated maturity of the applicable obligation; provided that the funds disbursed under such obligation have remained in Argentina for at least 365 days; or
|
|
(b)
|
within the term necessary for performing the payment obligations, when such payment obligations depend on the occurrence of specific conditions set forth in the related contracts, such as a cash flow excess clause or automatic cash reinvestment clause.
|
Period-End
|
Average for Period
|
Low
|
High
|
|||||||||||||
(Brazilian
reais
per U.S. dollar)
|
||||||||||||||||
R$
|
R$
|
R$
|
R$
|
|||||||||||||
Year Ended December 31:
|
||||||||||||||||
2008
|
2.337 | 2.030 | 1.559 | 2.500 | ||||||||||||
2009
|
1.741 | 1.994 | 1.702 | 2.422 | ||||||||||||
2010
|
1.666 | 1.759 | 1.655 | 1.881 | ||||||||||||
2011
|
1.876 | 1.675 | 1.535 | 1.902 | ||||||||||||
2012
|
2.044 | 1.959 | 1.702 | 2.112 | ||||||||||||
Quarter Ended:
|
||||||||||||||||
March 31, 2013
|
1.976 | 1.998 | 1.953 | 2.047 | ||||||||||||
Month Ended:
|
||||||||||||||||
September 30, 2012
|
2.031 | 2.028 | 2.014 | 2.039 | ||||||||||||
October 31, 2012
|
2.031 | 2.030 | 2.022 | 2.038 | ||||||||||||
November 30, 2012
|
2.107 | 2.068 | 2.031 | 2.107 | ||||||||||||
December 31, 2012
|
2.044 | 2.078 | 2.044 | 2.112 | ||||||||||||
January 31, 2013
|
1.988 | 2.031 | 1.988 | 2.047 | ||||||||||||
February 28, 2013
|
1.975 | 1.973 | 1.957 | 1.989 | ||||||||||||
March 31, 2013
|
2.019 | 1.981 | 1.953 | 2.019 | ||||||||||||
April 30, 2013 (through April 24, 2013)
|
2.024 | 2.002 | 1.974 | 2.024 |
Period-End
|
Average for Period
|
Low
|
High
|
|||||||||||||
(Mexican
pesos
per U.S. dollar)
|
||||||||||||||||
Ps.
|
Ps.
|
Ps.
|
Ps.
|
|||||||||||||
Year Ended December 31:
|
||||||||||||||||
2008
|
13.77 | 11.14 | 9.92 | 13.92 | ||||||||||||
2009
|
13.07 | 13.50 | 12.60 | 15.37 | ||||||||||||
2010
|
12.36 | 12.64 | 12.16 | 13.18 | ||||||||||||
2011
|
13.98 | 12.43 | 11.50 | 14.24 | ||||||||||||
2012
|
13.01 | 13.17 | 14.39 | 12.63 | ||||||||||||
Quarter Ended:
|
||||||||||||||||
March 31, 2013
|
12.11 | 12.61 | 12.11 | 12.99 | ||||||||||||
Month Ended:
|
||||||||||||||||
September 30, 2012
|
12.85 | 13.00 | 12.75 | 13.42 | ||||||||||||
October 31, 2012
|
13.09 | 12.87 | 12.70 | 13.09 | ||||||||||||
November 30, 2012
|
13.04 | 13.10 | 12.98 | 13.25 | ||||||||||||
December 31, 2012
|
13.01 | 12.87 | 12.72 | 13.01 | ||||||||||||
January 31, 2013
|
12.71 | 12.71 | 12.59 | 12.99 | ||||||||||||
February 28, 2013
|
12.87 | 12.72 | 12.63 | 12.87 | ||||||||||||
March 31, 2013
|
12.83 | 12.55 | 12.35 | 12.83 | ||||||||||||
April 30, 2012 (through April 24, 2013)
|
12.32 | 12.23 | 12.07 | 12.36 |
Purchase
|
Sale
|
Payment of External Public Debt
|
||||||||||
(Venezuelan
bolívares
fuertes
per U.S. dollar)
|
||||||||||||
Bs.F
|
Bs.F
|
Bs.F
|
||||||||||
January 1, 2008 through January 7, 2010
|
2.1446 | 2.1500 | 2.1500 |
Essential Goods
|
Non-essential Goods
|
|||||||
(Venezuelan
bolívares
fuertes
per U.S. dollar)
|
||||||||
Bs.F
|
Bs.F
|
|||||||
January 8, 2010 through December 31, 2010
|
2.60 | 4.30 |
Purchase
|
Sale
|
Payment of External Public Debt
|
||||||||||
(Venezuelan
bolívares fuertes
per U.S. dollar)
|
||||||||||||
Bs.F
|
Bs.F
|
Bs.F
|
||||||||||
January 1, 2011 through February 8, 2013
|
4.2893 | 4.3000 | 4.3000 |
Purchase
|
Sale
|
Payment of External Public Debt
|
||||||||||
(Venezuelan
bolívares fuertes
per U.S. dollar)
|
||||||||||||
Bs.F
|
Bs.F
|
Bs.F
|
||||||||||
February 9, 2013 through April 24, 2013
|
6.2842 | 6.3000 | 6.3000 |
|
·
|
incurring additional indebtedness;
|
|
·
|
paying dividends;
|
|
·
|
redeeming, repurchasing or retiring our capital stock;
|
|
·
|
making investments;
|
|
·
|
creating liens;
|
|
·
|
creating limitations on the ability of our restricted subsidiaries to pay dividends, make loans or transfer property to us;
|
|
·
|
engaging in transactions with affiliates;
|
|
·
|
engaging in substantially different lines of business;
|
|
·
|
selling assets, including capital stock of our subsidiaries; and
|
|
·
|
consolidating, merging or transferring assets.
|
|
·
|
governmental regulations applicable to food services operations;
|
|
·
|
changes in social, political and economic conditions;
|
|
·
|
transportation delays;
|
|
·
|
power and other utility shutdowns or shortages;
|
|
·
|
limitations on foreign investment;
|
|
·
|
restrictions on currency convertibility and volatility of foreign exchange markets;
|
|
·
|
import-export quotas and restrictions on importation;
|
|
·
|
changes in local labor conditions;
|
|
·
|
changes in tax and other laws and regulations;
|
|
·
|
expropriation and nationalization of our assets in a particular jurisdiction; and
|
|
·
|
restrictions on repatriation of dividends or profits.
|
|
·
|
the U.S. court issuing the judgment had jurisdiction in the matter and we either submitted to such jurisdiction or were resident or carrying on business within such jurisdiction and were duly served with process;
|
|
·
|
the judgment given by the U.S. court was not in respect of penalties, taxes, fines or similar fiscal or revenue obligations of ours;
|
|
·
|
in obtaining judgment there was no fraud on the part of the person in whose favor judgment was given or on the part of the court;
|
|
·
|
recognition or enforcement of the judgment in the British Virgin Islands would not be contrary to public policy; and
|
|
·
|
the proceedings pursuant to which judgment were obtained were not contrary to public policy.
|
As of and for the Years Ended December 31,
|
||||||||||||||||||||
2012
|
2011
|
2010
|
2009
|
2008
|
||||||||||||||||
(in thousands of U.S. dollars, except percentages)
|
||||||||||||||||||||
Total Revenues
|
||||||||||||||||||||
Brazil
|
$ | 1,797,556 | $ | 1,890,824 | $ | 1,595,571 | $ | 1,200,742 | $ | 1,237,208 | ||||||||||
Caribbean division
|
273,467 | 267,701 | 260,617 | 244,774 | 231,734 | |||||||||||||||
NOLAD
|
384,041 | 355,265 | 305,017 | 240,333 | 232,083 | |||||||||||||||
SLAD
(1)
|
1,342,330 | 1,143,859 | 856,913 | 979,627 | 905,817 | |||||||||||||||
Total
|
3,797,394 | 3,657,649 | 3,018,118 | 2,665,476 | 2,606,842 | |||||||||||||||
Adjusted EBITDA(2)
|
||||||||||||||||||||
Brazil
|
$ | 240,954 | $ | 289,462 | $ | 250,606 | $ | 160,037 | $ | 144,965 | ||||||||||
Caribbean division
|
12,345 | 9,493 | 23,556 | 21,167 | 22,013 | |||||||||||||||
NOLAD
|
26,738 | 19,551 | 15,400 | 3,918 | 15,961 | |||||||||||||||
SLAD
(1)
|
150,520 | 121,475 | 83,998 | 129,889 | 138,683 | |||||||||||||||
Corporate and others
|
(89,996 | ) | (100,193 | ) | (74,446 | ) | (48,628 | ) | (33,648 | ) | ||||||||||
Total
|
340,561 | 339,788 | 299,114 | 266,383 | 287,974 | |||||||||||||||
Adjusted EBITDA Margin(3)
|
||||||||||||||||||||
Brazil
|
13.4 | % | 15.3 | % | 15.7 | % | 13.3 | % | 11.7 | % | ||||||||||
Caribbean division
|
4.5 | 3.5 | 9.0 | 8.6 | 9.5 | |||||||||||||||
NOLAD
|
7.0 | 5.5 | 5.0 | 1.6 | 6.9 | |||||||||||||||
SLAD
(1)
|
11.2 | 10.6 | 9.8 | 13.3 | 15.3 | |||||||||||||||
Total
|
9.0 | 9.3 | 9.9 | 10.0 | 11.0 | |||||||||||||||
Systemwide comparable sales growth(4)(5)
|
9.2 | % | 13.7 | % | 14.9 | % | 5.5 | % | — | |||||||||||
Brazil
|
5.2 | 9.3 | 17.5 | 2.7 | — | |||||||||||||||
Caribbean division
|
2.6 | (0.6 | ) | 4.7 | 4.2 | — | ||||||||||||||
NOLAD
|
4.4 | 8.5 | 9.1 | (1.7 | ) | — | ||||||||||||||
SLAD
|
19.9 | 29.6 | 16.1 | 12.2 | — |
(1)
|
Currency controls in Venezuela and related accounting changes have had a significant effect on our results of operations and impact the comparability of our results of operations in 2010 compared to 2009.
|
(2)
|
Adjusted EBITDA is a measure of our performance that is reviewed by our management. Adjusted EBITDA does not have a standardized meaning and, accordingly, our definition of Adjusted EBITDA may not be comparable to Adjusted EBITDA as used by other companies. Total Adjusted EBITDA is a non-GAAP measure. For our definition of Adjusted EBITDA and a reconciliation thereof, see “Presentation of Financial and Other Information—Other Financial Measures” and “Item 3. Key Information—A. Selected Financial Data.”
|
(3)
|
Adjusted EBITDA margin is Adjusted EBITDA divided by total revenues, expressed as a percentage.
|
(4)
|
Systemwide comparable sales growth refers to the change in our restaurant sales in one period from a comparable period for restaurants that have been open for thirteen months or longer. Systemwide comparable sales growth is provided and analyzed on a constant currency basis, which means it is calculated using the same exchange rate over the periods under comparison to remove the effects of currency fluctuations from this trend analysis. We believe this constant currency measure provides a more meaningful analysis of our business by identifying the underlying business trend, without distortion from the effect of foreign currency movements.
|
(5)
|
Systemwide comparable sales growth is presented on a systemwide basis, which means it includes sales by our Company-operated restaurants and our franchised restaurants. 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.
|
Ownership
|
Store Type(1)
|
Building/ Land(2)
|
||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio by Division
|
Company-Operated
|
Joint Venture
|
Franchised
|
Developmental License
|
Total
|
Freestanding
|
Food Court
|
In-Store
|
Mall Store
|
Dessert Centers
|
McCafé Locations
|
Owned
|
Leased
|
|||||||||||||||||||||||||||||||||||||||
Brazil
|
533 | — | 198 | — | 731 | 290 | 214 | 85 | 142 | 1,162 | 84 | 118 | 613 | |||||||||||||||||||||||||||||||||||||||
Caribbean Division
|
96 | — | 42 | 1 | 139 | 120 | 1 | 6 | 12 | 6 | 18 | 52 | 86 | |||||||||||||||||||||||||||||||||||||||
NOLAD
|
335 | — | 157 | 11 | 503 | 261 | 130 | 56 | 55 | 315 | 57 | 167 | 325 | |||||||||||||||||||||||||||||||||||||||
SLAD
|
462 | 27 | 86 | — | 575 | 221 | 87 | 146 | 120 | 469 | 175 | 176 | 399 | |||||||||||||||||||||||||||||||||||||||
Total
|
1,426 | 27 | 483 | 12 | 1,948 | 892 | 432 | 293 | 329 | 1,952 | 334 | 513 | 1,423 |
(1)
|
In addition, we have two non-traditional stores, such as food carts.
|
(2)
|
Developmental licenses and mobile stores are not included in these figures.
|
Country
|
Award
|
Ranking
|
||
Argentina
|
“Best Companies to Work for” in Argentina
|
8th
|
||
Brazil
|
“Best Companies to Work for” in Brazil
|
22nd
|
||
Colombia
|
“Best Companies to Work for” in Colombia
|
4th
|
||
Costa Rica
|
“Best Companies to Work for” in Costa Rica
|
11th
|
||
Costa Rica and Panama
|
“Work and Life Balance” Certification
|
—
|
||
Chile
|
“Best Companies to Work for” in Chile
|
25th
|
||
Ecuador
|
“Best Companies to Work for” in Ecuador
|
2nd
|
||
Mexico
|
“Best Companies to Work for” in Mexico
|
3rd
|
||
Panama
|
“Best Companies to Work for” in Panama
|
2nd
|
||
Peru
|
“Best Companies to Work for” in Peru
|
9th
|
||
Uruguay
|
“Best Companies to Work for” in Uruguay
|
4th
|
||
Venezuela
|
“Best Companies to Work for” in Venezuela
|
4th
|
(1)
|
Includes class A shares and class B shares beneficially owned by Mr. Staton, our Chairman and CEO. Los Laureles Ltd. is beneficially owned by Mr. Staton. See “Item 7. Major Shareholders and Related Party Transactions—A. Major Shareholders—Los Laureles Ltd.” Mr. Staton directly owns 0.001% of the shares of Arcos Dorados Cöoperatieve U.S.
|
(2)
|
Includes operating subsidiaries held directly and, in some cases, indirectly through certain intermediate subsidiaries.
|
|
·
|
food and paper costs, which represent the costs of the products that we sell to customers in Company-operated restaurants;
|
|
·
|
payroll and employee benefit costs, which represent the wages paid to Company-operated restaurant managers and crew, as well as the costs of benefits and training, and which tend to increase as we increase sales;
|
|
·
|
occupancy and other operating expenses, which represent all other direct costs of our Company-operated restaurants, including advertising and promotional expenses, the costs of outside rent, which are generally tied to sales and therefore increase as we increase our sales, outside services, such as security and cash collection, building and leasehold improvement depreciation, depreciation on equipment, repairs and maintenance, insurance, restaurant operating supplies and utilities; and
|
|
·
|
royalty fees, representing the continuing franchise fees we pay to McDonald’s pursuant to the MFAs, which are determined as a percentage of gross product sales.
|
|
·
|
the nature of the estimates or assumptions is material due to the levels of subjectivity and judgment necessary to account for highly uncertain matters or the susceptibility of such matters to change; and
|
|
·
|
the impact of the estimates and assumptions on our financial condition or operating performance is material.
|
For the Years Ended December 31,
|
||||||||||||
2012
|
2011
|
%
Increase (Decrease)
|
||||||||||
(in thousands of U.S. dollars)
|
||||||||||||
Sales by Company-operated restaurants
|
$ | 3,634,371 | $ | 3,504,128 | 3.7 | % | ||||||
Revenues from franchised restaurants
|
163,023 | 153,521 | 6.2 | |||||||||
Total revenues
|
3,797,394 | 3,657,649 | 3.8 |
For the Years Ended December 31,
|
||||||||||||
2012
|
2011
|
%
Increase (Decrease)
|
||||||||||
(in thousands of U.S. dollars)
|
||||||||||||
Company-operated restaurant expenses:
|
||||||||||||
Food and paper
|
(1,269,146 | ) | (1,216,141 | ) | 4.4 | |||||||
Payroll and employee benefits
|
(753,120 | ) | (701,278 | ) | 7.4 | |||||||
Occupancy and other operating expenses
|
(984,004 | ) | (918,102 | ) | 7.2 | |||||||
Royalty fees
|
(180,547 | ) | (170,400 | ) | 6.0 | |||||||
Franchised restaurants – occupancy expenses
|
(56,057 | ) | (51,396 | ) | 9.1 | |||||||
General and administrative expenses
|
(314,619 | ) | (334,914 | ) | (6.1 | ) | ||||||
Other operating expenses, net
|
(3,261 | ) | (14,665 | ) | (77.8 | ) | ||||||
Total operating costs and expenses
|
(3,560,754 | ) | (3,406,896 | ) | 4.5 | |||||||
Operating income
|
236,640 | 250,753 | (5.6 | ) | ||||||||
Net interest expense
|
(54,247 | ) | (60,749 | ) | (10.7 | ) | ||||||
Loss from derivative instruments
|
(891 | ) | (9,237 | ) | (90.4 | ) | ||||||
Foreign currency exchange results
|
(18,420 | ) | (23,926 | ) | (23.0 | ) | ||||||
Other non-operating (expenses) income, net
|
(2,119 | ) | 3,562 | (159.5 | ) | |||||||
Income before income taxes
|
160,963 | 160,403 | 0.3 | |||||||||
Income tax expense
|
(46,375 | ) | (44,603 | ) | 4.0 | |||||||
Net income
|
114,588 | 115,800 | (1.0 | ) | ||||||||
Less: Net income attributable to non-controlling interests
|
(256 | ) | (271 | ) | (5.5 | ) | ||||||
Net income attributable to Arcos Dorados Holdings Inc.
|
114,332 | 115,529 | (1.0 | ) |
Systemwide Restaurants
|
For the Years Ended December 31,
|
|||||||
2012
|
2011
|
|||||||
Systemwide restaurants at beginning of period
|
1,840 | 1,755 | ||||||
Restaurant openings
|
130 | 101 | ||||||
Restaurant closings
|
(22 | ) | (16 | ) | ||||
Systemwide restaurants at end of period
|
1,948 | 1,840 |
Company-operated Restaurants
|
For the Years Ended December 31,
|
|||||||
2012
|
2011
|
|||||||
Company-operated restaurants at beginning of period
|
1,358 | 1,292 | ||||||
Restaurant openings
|
99 | 79 | ||||||
Restaurant closings
|
(16 | ) | (15 | ) | ||||
Net conversions of franchised restaurants to Company-operated restaurants
|
12 | 2 | ||||||
Company-operated restaurants at end of period
|
1,453 | 1,358 |
Franchised Restaurants
|
For the Years Ended December 31,
|
|||||||
2012
|
2011
|
|||||||
Franchised restaurants at beginning of period
|
482 | 463 | ||||||
Restaurant openings
|
31 | 22 | ||||||
Restaurant closings
|
(6 | ) | (1 | ) | ||||
Net conversions of franchised restaurants to Company-operated restaurants
|
(12 | ) | (2 | ) | ||||
Franchised restaurants at end of period
|
495 | 482 |
For the Year Ended December 31, 2012
|
||||
Arcos Dorados
|
||||
Systemwide comparable sales growth
|
9.2 | % | ||
Company-operated comparable sales growth
|
9.0 | |||
Franchised comparable sales growth
|
9.5 | |||
Systemwide Comparable Sales Growth by Division
|
||||
Brazil
|
5.2 | % | ||
Caribbean division
|
2.6 | |||
NOLAD
|
4.4 | |||
SLAD
|
19.9 | |||
Company-operated Comparable Sales Growth by Division
|
||||
Brazil
|
4.8 | % | ||
Caribbean division
|
4.3 | |||
NOLAD
|
4.5 | |||
SLAD
|
18.4 | |||
Franchised Comparable Sales Growth by Division
|
||||
Brazil
|
6.1 | % | ||
Caribbean division
|
(2.1 | ) | ||
NOLAD
|
4.1 | |||
SLAD
|
26.1 |
For the Years Ended
December 31,
|
||||||||
2012
|
2011
|
|||||||
(in thousands of U.S. dollars)
|
||||||||
Systemwide average restaurant sales
|
$ | 2,603 | $ | 2,648 | ||||
Company-operated average restaurant sales
|
2,586 | 2,645 | ||||||
Franchised average restaurant sales
|
2,654 | 2,658 |
For the Year Ended
December 31, 2012
|
||||||||
(in nominal terms)
|
(in constant currency)
|
|||||||
Brazil
|
(4.6 | )% | 11.4 | % | ||||
Caribbean division
|
— | 2.0 | ||||||
NOLAD
|
5.9 | 9.9 | ||||||
SLAD
|
18.6 | 23.5 | ||||||
Total Systemwide Sales Growth
|
3.6 | 14.0 |
For the Years Ended
December 31,
|
||||||||||||
2012
|
2011
|
% Increase (Decrease)
|
||||||||||
(in thousands of U.S. dollars)
|
||||||||||||
Sales by Company-operated Restaurants
|
||||||||||||
Brazil
|
$ | 1,717,761 | $ | 1,811,390 | (5.2 | )% | ||||||
Caribbean division
|
262,449 | 254,251 | 3.2 | |||||||||
NOLAD
|
364,588 | 336,004 | 8.5 | |||||||||
SLAD
|
1,289,573 | 1,102,483 | 17.0 | |||||||||
Total
|
3,634,371 | 3,504,128 | 3.7 | |||||||||
Revenues from Franchised Restaurants
|
||||||||||||
Brazil
|
$ | 79,795 | $ | 79,434 | 0.5 | % | ||||||
Caribbean division
|
11,018 | 13,450 | (18.1 | ) | ||||||||
NOLAD.
|
19,453 | 19,261 | 1.0 | |||||||||
SLAD
|
52,757 | 41,376 | 27.5 | |||||||||
Total
|
163,023 | 153,521 | 6.2 | |||||||||
Total Revenues
|
||||||||||||
Brazil
|
$ | 1,797,556 | $ | 1,890,824 | (4.9 | )% | ||||||
Caribbean division
|
273,467 | 267,701 | 2.2 | |||||||||
NOLAD
|
384,041 | 355,265 | 8.1 | |||||||||
SLAD
|
1,342,330 | 1,143,859 | 17.4 | |||||||||
Total
|
3,797,394 | 3,657,649 | 3.8 |
For the Years Ended December 31,
|
||||||||
2012
|
2011
|
|||||||
Brazil
|
58.9 | % | 64.2 | % | ||||
Caribbean Division
|
66.8 | 61.7 | ||||||
NOLAD
|
46.4 | 44.3 | ||||||
SLAD
|
77.9 | 74.8 | ||||||
Total
|
65.6 | 66.5 |
For the Years Ended December 31,
|
||||||||||||
2012
|
2011
|
% Increase (Decrease)
|
||||||||||
(in thousands of U.S. dollars)
|
||||||||||||
Brazil
|
$ | 193,339 | $ | 246,926 | (21.7 | )% | ||||||
Caribbean division
|
(5,020 | ) | (5,244 | ) | 4.3 | |||||||
NOLAD
|
(5,557 | ) | (8,709 | ) | 36.2 | |||||||
SLAD
|
120,536 | 99,813 | 20.8 | |||||||||
Corporate and others and purchase price allocation
|
(66,658 | ) | (82,033 | ) | 18.7 | |||||||
Total
|
236,640 | 250,753 | (5.6 | ) |
For the Years Ended December 31,
|
||||||||||||
2011
|
2010
|
%
Increase (Decrease)
|
||||||||||
(in thousands of U.S. dollars)
|
||||||||||||
Sales by Company-operated restaurants
|
$ | 3,504,128 | $ | 2,894,466 | 21.1 | % | ||||||
Revenues from franchised restaurants
|
153,521 | 123,652 | 24.2 | |||||||||
Total revenues
|
3,657,649 | 3,018,118 | 21.2 | |||||||||
Company-operated restaurant expenses:
|
||||||||||||
Food and paper
|
(1,216,141 | ) | (1,023,464 | ) | 18.8 | |||||||
Payroll and employee benefits
|
(701,278 | ) | (569,084 | ) | 23.2 | |||||||
Occupancy and other operating expenses
|
(918,102 | ) | (765,777 | ) | 19.9 | |||||||
Royalty fees
|
(170,400 | ) | (140,973 | ) | 20.9 | |||||||
Franchised restaurants – occupancy expenses
|
(51,396 | ) | (37,634 | ) | 36.6 | |||||||
General and administrative expenses
|
(334,914 | ) | (254,165 | ) | 31.8 | |||||||
Other operating expenses, net
|
(14,665 | ) | (22,464 | ) | (34.7 | ) | ||||||
Total operating costs and expenses
|
(3,406,896 | ) | (2,813,561 | ) | 21.1 | |||||||
Operating income
|
250,753 | 204,557 | 22.6 | |||||||||
Net interest expense
|
(60,749 | ) | (41,613 | ) | 46.0 | |||||||
Loss from derivative instruments
|
(9,237 | ) | (32,809 | ) | (71.8 | ) | ||||||
Foreign currency exchange results
|
(23,926 | ) | 3,237 | (839.1 | ) | |||||||
Other non-operating income (expenses), net
|
3,562 | (23,630 | ) | 115.1 | ||||||||
Income before income taxes
|
160,403 | 109,742 | 46.2 | |||||||||
Income tax expense
|
(44,603 | ) | (3,450 | ) | 1,192.8 | |||||||
Net income
|
115,800 | 106,292 | 8.9 | |||||||||
Less: Net income attributable to non-controlling interests
|
(271 | ) | (271 | ) | — | |||||||
Net income attributable to Arcos Dorados Holdings Inc.
|
115,529 | 106,021 | 9.0 |
Systemwide Restaurants
|
For the Years Ended December 31,
|
|||||||
2011
|
2010
|
|||||||
Systemwide restaurants at beginning of period
|
1,755 | 1,680 | ||||||
Restaurant openings
|
101 | 85 | ||||||
Restaurant closings
|
(16 | ) | (10 | ) | ||||
Systemwide restaurants at end of period
|
1,840 | 1,755 |
Company-operated Restaurants
|
For the Years Ended December 31,
|
|||||||
2011
|
2010
|
|||||||
Company-operated restaurants at beginning of period
|
1,292 | 1,226 | ||||||
Restaurant openings
|
79 | 63 | ||||||
Restaurant closings
|
(15 | ) | (9 | ) | ||||
Net conversions of franchised restaurants to Company-operated restaurants
|
2 | 12 | ||||||
Company-operated restaurants at end of period
|
1,358 | 1,292 |
Franchised Restaurants
|
For the Years Ended December 31,
|
|||||||
2011
|
2010
|
|||||||
Franchised restaurants at beginning of period
|
463 | 454 | ||||||
Restaurant openings
|
22 | 22 | ||||||
Restaurant closings
|
(1 | ) | (1 | ) | ||||
Net conversions of franchised restaurants to Company-operated restaurants
|
(2 | ) | (12 | ) | ||||
Franchised restaurants at end of period
|
482 | 463 |
For the Year Ended December 31, 2011
|
||||
Arcos Dorados
|
||||
Systemwide comparable sales growth
|
13.7 | % | ||
Company-operated comparable sales growth
|
13.4 | |||
Franchised comparable sales growth
|
14.5 | |||
Systemwide Comparable Sales Growth by Division
|
||||
Brazil
|
9.3 | % | ||
Caribbean division
|
(0.6 | ) | ||
NOLAD
|
8.5 | |||
SLAD
|
29.6 |
For the Year Ended December 31, 2011
|
||||
Company-operated Comparable Sales Growth by Division
|
||||
Brazil
|
8.5 | % | ||
Caribbean division
|
(0.6 | ) | ||
NOLAD
|
8.4 | |||
SLAD
|
28.1 | |||
Franchised Comparable Sales Growth by Division
|
||||
Brazil
|
11.5 | % | ||
Caribbean division
|
(0.6 | ) | ||
NOLAD
|
8.8 | |||
SLAD
|
36.1 |
For the Years Ended
December 31,
|
||||||||
2011
|
2010
|
|||||||
(in thousands of U.S. dollars)
|
||||||||
Systemwide average restaurant sales
|
$ | 2,648 | $ | 2,288 | ||||
Company-operated average restaurant sales
|
2,645 | 2,299 | ||||||
Franchised average restaurant sales
|
2,658 | 2,257 |
For the Year Ended
December 31, 2011
|
||||||||
(in nominal terms)
|
(in constant currency)
|
|||||||
Brazil
|
19.2 | % | 13.6 | % | ||||
Caribbean division
|
1.4 | 0.2 | ||||||
NOLAD
|
14.9 | 12.8 | ||||||
SLAD
|
34.5 | 32.8 | ||||||
Total Systemwide Sales Growth
|
21.1 | 17.3 |
For the Years Ended
December 31,
|
||||||||||||
2011
|
2010
|
% Increase (Decrease)
|
||||||||||
(in thousands of U.S. dollars)
|
||||||||||||
Sales by Company-operated Restaurants
|
||||||||||||
Brazil
|
$ | 1,811,390 | $ | 1,531,386 | 18.3 | % | ||||||
Caribbean division
|
254,251 | 248,470 | 2.3 | |||||||||
NOLAD
|
336,004 | 287,920 | 16.7 | |||||||||
SLAD
|
1,102,483 | 826,690 | 33.4 | |||||||||
Total
|
3,504,128 | 2,894,466 | 21.1 | |||||||||
Revenues from Franchised Restaurants
|
||||||||||||
Brazil
|
$ | 79,434 | $ | 64,185 | 23.8 | % | ||||||
Caribbean division
|
13,450 | 12,147 | 10.7 | |||||||||
NOLAD.
|
19,261 | 17,097 | 12.7 | |||||||||
SLAD
|
41,376 | 30,223 | 36.9 | |||||||||
Total
|
153,521 | 123,652 | 24.2 | |||||||||
Total Revenues
|
||||||||||||
Brazil
|
$ | 1,890,824 | $ | 1,595,571 | 18.5 | % | ||||||
Caribbean division
|
267,701 | 260,617 | 2.7 | |||||||||
NOLAD
|
355,265 | 305,017 | 16.5 | |||||||||
SLAD
|
1,143,859 | 856,913 | 33.5 | |||||||||
Total
|
3,657,649 | 3,018,118 | 21.2 |
For the Years Ended December 31,
|
||||||||
2011
|
2010
|
|||||||
Brazil
|
64.2 | % | 62.4 | % | ||||
Caribbean Division
|
61.7 | 71.4 | ||||||
NOLAD
|
44.3 | 41.4 | ||||||
SLAD
|
74.8 | 74.9 | ||||||
Total
|
66.5 | 69.6 |
For the Years Ended December 31,
|
||||||||||||
2011
|
2010
|
% Increase (Decrease)
|
||||||||||
(in thousands of U.S. dollars)
|
||||||||||||
Brazil
|
$ | 246,926 | $ | 208,102 | 18.7 | % | ||||||
Caribbean division
|
(5,244 | ) | 11,189 | (146.9 | ) | |||||||
NOLAD
|
(8,709 | ) | (16,718 | ) | 47.9 | |||||||
SLAD
|
99,813 | 66,288 | 50.6 | |||||||||
Corporate and others and purchase price allocation
|
(82,033 | ) | (64,304 | ) | (27.6 | ) | ||||||
Total
|
250,753 | 204,557 | 22.6 |
|
·
|
our ability to generate cash flows from our operations;
|
|
·
|
the level of our outstanding indebtedness and the interest we pay on this indebtedness;
|
|
·
|
our dividend policy;
|
|
·
|
changes in exchange rates which will impact our generation of cash flows from operations when measured in U.S. dollars; and
|
|
·
|
our capital expenditure requirements.
|
For the Years Ended
December 31,
|
||||||||||||
2012
|
2011
|
2010
|
||||||||||
(in thousands of U.S. dollars)
|
||||||||||||
Net cash provided by operating activities
|
$ | 230,113 | $ | 261,624 | $ | 263,876 | ||||||
Net cash used in investing activities
|
(306,421 | ) | (320,132 | ) | (178,224 | ) | ||||||
Net cash provided by (used in) financing activities
|
90,646 | 35,673 | (51,287 | ) | ||||||||
Effect of exchange rate changes on cash and cash equivalents
|
(5,788 | ) | (8,963 | ) | 5,759 | |||||||
Increase (decrease) in cash and cash equivalents
|
8,550 | (31,798 | ) | 40,124 |
For the Years Ended
December 31,
|
||||||||||||
2012
|
2011
|
2010
|
||||||||||
(in thousands of U.S. dollars)
|
||||||||||||
Net income attributable to Arcos Dorados Holdings Inc.
|
$ | 114,332 | $ | 115,529 | $ | 106,021 | ||||||
Non-cash charges and credits
|
131,958 | 137,970 | 99,196 | |||||||||
Changes in assets and liabilities
|
(16,177 | ) | 8,125 | 58,659 | ||||||||
Net cash provided by operating activities
|
230,113 | 261,624 | 263,876 |
For the Years Ended
December 31,
|
||||||||||||
2012
|
2011
|
2010
|
||||||||||
(in thousands of U.S. dollars)
|
||||||||||||
Property and equipment expenditures
|
$ | (294,478 | ) | $ | (319,859 | ) | $ | (175,669 | ) | |||
Purchases of restaurant businesses
|
(6,004 | ) | (5,993 | ) | (504 | ) | ||||||
Proceeds from sales of property and equipment
|
6,643 | 10,681 | 6,215 | |||||||||
Loans to related parties
|
(7,000 | ) | — | — | ||||||||
Others, net
|
(5,582 | ) | (4,961 | ) | (8,266 | ) | ||||||
Net cash used in investing activities
|
(306,421 | ) | (320,132 | ) | (178,224 | ) |
For the Years Ended
December 31,
|
||||||||||||
2012
|
2011
|
2010
|
||||||||||
(in thousands of U.S. dollars)
|
||||||||||||
New restaurants
|
$ | 177,329 | $ | 139,647 | $ | 69,448 | ||||||
Existing restaurants
|
79,717 | 139,140 | 68,140 | |||||||||
Other(1)
|
37,432 | 41,072 | 38,081 | |||||||||
Total property and equipment expenditures
|
294,478 | 319,859 | 175,669 |
(1)
|
Primarily corporate equipment and other office related expenditures.
|
For the Years Ended
December 31,
|
||||||||||||
2012
|
2011
|
2010
|
||||||||||
(in thousands of U.S. dollars)
|
||||||||||||
Partial redemption of the 2019 notes
|
$ | — | $ | (152,005 | ) | $ | — | |||||
Net payments of derivative instruments
|
(4,322 | ) | (118,932 | ) | (37,815 | ) | ||||||
Net short-term borrowings
|
(157 | ) | (10,871 | ) | 3,805 | |||||||
Collateral deposits
|
— | 15,000 | 25,000 | |||||||||
Split-off of Axionlog business
|
— | (35,425 | ) | — | ||||||||
Issuance of class A shares in connection with the initial public offering
|
— | 152,281 | — | |||||||||
Issuance of the 2016 notes
|
149,658 | 255,102 | — | |||||||||
Distribution of dividends to our shareholders
|
(50,036 | ) | (56,627 | ) | (33,400 | ) | ||||||
Other financing activities
|
(4,497 | ) | (12,850 | ) | (8,877 | ) | ||||||
Net cash provided by (used in) financing activities
|
90,646 | 35,673 | (51,287 | ) |
|
·
|
Social upward mobility in Latin America and the Caribbean
: Our sales have benefited, and we expect to continue to benefit, from our Territories’ population size, younger age profile when compared to more developed markets and improving socio-economic conditions. This has led to a modernization of consumption patterns and increased affordability of our products across socio-economic segments, leading to greater demand for our products.
|
|
·
|
Decline in free time
: More single-parent and dual-earner households have increased the demand for the convenience offered by eating out and takeout food.
|
|
·
|
Product offerings
: Our beverages, core meals, desserts, breakfast, reduced calorie and sodium products, and value menu item offerings have been popular among customers and—combined with our revenue management—have allowed us to create traffic into our restaurants.
|
|
·
|
Increased competition in some markets
: The popularity of the QSR concept in markets such as Puerto Rico and Mexico has attracted new competitors. Even though we have been able to maintain or even increase market share in these markets, we have seen a reduction in pricing flexibility and have increased the focus of our marketing efforts on value offerings.
|
|
·
|
Inflationary environment
: Over the last few years, we have been able through our revenue management strategy to mitigate cost increase tied to inflation. However, inflation has been, and will continue to be, an important factor affecting our results of operations, specifically impacting our food and paper costs, occupancy and other operating expenses, general administrative expenses and labor costs.
|
|
·
|
Increased general and administrative costs to support future growth:
Our business has been growing at a very rapid pace, and we experienced increasing general and administrative expenses in order to support and prepare for our future growth (both operationally and as a public company). However, in 2012 general and administrative expenses decreased as a percentage of total revenues and we expect this trend to continue in the near future.
|
|
·
|
Increased volatility of foreign exchange rates:
Our results of operations have been impacted by increased volatility in foreign exchange rates in many of the Territories. We expect that foreign exchange rates will continue to be an important factor affecting our foreign currency exchange results and the “Accumulated other comprehensive loss” component of shareholders’ equity and, consequently, our results of operations and financial condition. See Note 27 to our consolidated financial statements for details about the devaluation in Venezuela announced subsequent to December 31, 2012.
|
Payment Due by Period
|
||||||||||||||||||||||||||||
Contractual Obligations
|
Total
|
2013
|
2014
|
2015
|
2016
|
2017
|
Thereafter
|
|||||||||||||||||||||
(in thousands of U.S. dollars)
|
||||||||||||||||||||||||||||
Capital lease obligations(1)
|
$ | 13,760 | $ | 1,837 | $ | 1,811 | $ | 1,463 | $ | 1,299 | $ | 745 | $ | 6,605 | ||||||||||||||
Operating lease obligations
|
1,008,372 | 140,480 | 131,971 | 122,294 | 111,660 | 101,157 | 400,810 | |||||||||||||||||||||
Contractual purchase obligations
|
172,747 | 64,207 | 43,563 | 23,750 | 21,863 | 19,364 | — | |||||||||||||||||||||
2016 notes(1)
|
463,907 | 33,724 | 33,724 | 33,724 | 362,735 | — | — | |||||||||||||||||||||
2019 notes(1)
|
470,615 | 23,145 | 23,145 | 23,145 | 23,145 | 23,145 | 354,890 | |||||||||||||||||||||
Other long-term borrowings(1)
|
4,827 | 845 | 2,209 | 1,773 | — | — | — | |||||||||||||||||||||
Derivative instruments
|
7,618 | 2,221 | (1,522 | ) | (1,326 | ) | 8,245 | — | — | |||||||||||||||||||
Total
|
2,141,846 | 266,459 | 234,901 | 204,823 | 528,947 | 144,411 | 762,305 |
(1)
|
Includes interest payments.
|
|
·
|
Mr. Staton, Mr. Lemonnier and Mr. Elias Ayub are Class I directors, whose term will expire at the annual meeting of shareholders to be held in 2015;
|
|
·
|
Mr. Hernández-Artigas and Ms. Franqui and Mr. Ramírez are Class II directors, whose term will expire at the annual meeting of shareholders to be held in 2016; and
|
|
·
|
Mr. Alonso, Mr. Chu and Mr. Vélez are Class III directors, whose term will expire at the annual meeting of shareholders to be held in 2014.
|
Name
|
Position
|
Age
|
||
Woods Staton
|
Chairman and CEO
|
63
|
||
Sergio Alonso
|
Chief Operating Officer
|
50
|
||
Germán Lemonnier
|
Chief Financial Officer
|
50
|
||
Annette Franqui
|
Director
|
51
|
||
Carlos Hernández-Artigas
|
Director
|
49
|
||
Michael Chu
|
Director
|
64
|
||
José Alberto Vélez
|
Director
|
63
|
||
Alfredo Elias Ayub
|
Director
|
63
|
||
Alejandro Ramírez Magaña
|
Director
|
40
|
Name
|
Position
|
Initial year of Appointment
|
||
Woods Staton
|
Chairman and CEO
|
2007
|
||
Sergio Alonso
|
Chief Operating Officer
|
2007
|
||
Germán Lemonnier
|
Chief Financial Officer
|
2007
|
||
Juan David Bastidas
|
Chief Legal Counsel
|
2010
|
||
José Valledor Rojo
|
Divisional President—Brazil
|
2011
|
||
José Fernandez
|
Divisional President—SLAD
|
2007
|
||
Juan Carlos Paba
|
Divisional President—Caribbean Division
|
2013
|
||
Marcelo Rabach
|
Divisional President—NOLAD
|
2013
|
||
Sebastian Magnasco
|
Vice President of Development
|
2007
|
||
Raul Mandía
|
Vice President of Marketing
|
2007
|
||
Pablo Rodriguez de la Torre
|
Vice President of Human Resources
|
2008
|
||
Flavia Vigio
|
Vice President of Communications
|
2007
|
||
Horacio Sbrolla
|
Vice President of Supply Chain
|
2007
|
||
Marlene Fernandez
|
Vice President of Government Relations
|
2011
|
|
·
|
the integrity of our financial statements;
|
|
·
|
the annual independent audit of our financial statements, the engagement of the independent auditor and the evaluation of the qualifications, independence and performance of our independent auditor;
|
|
·
|
the performance of our internal audit function; and
|
|
·
|
our compliance with legal and regulatory requirements.
|
|
·
|
approving corporate goals and objectives relevant to compensation, evaluating the performance of executives in light of such goals and objectives and recommending compensation based on such evaluation, recommending any long-term incentive component of compensation and approving the compensation of our executive officers;
|
|
·
|
reviewing and reporting to the board of directors on our management succession plan and on compensation for directors;
|
|
·
|
evaluating our compensation and benefits policies; and
|
|
·
|
reporting to the board periodically.
|
Division
|
Crew
|
Restaurant Managers
|
Professional Staff
|
Total
|
||||||||||||
Brazil
|
33,805 | 6,099 | 526 | 40,430 | ||||||||||||
Caribbean division
|
5,158 | 710 | 158 | 6,026 | ||||||||||||
NOLAD
|
10,672 | 1,811 | 305 | 12,788 | ||||||||||||
SLAD
|
29,279 | 4,671 | 554 | 34,504 | ||||||||||||
Corporate and other
|
— | — | 534 | 534 | ||||||||||||
Total
|
78,914 | 13,291 | 2,077 | 94,282 |
Shareholder
|
Class A Shares
|
Percentage of Outstanding Class A Shares
|
Class B Shares
|
Percentage of Outstanding Class B Shares
|
Total Economic Interest
|
Total Voting Interest(1)
|
||||||||||||||||||
Los Laureles Ltd.(2)(3)
|
— | — | 80,000,000 | 100.0 | % | 38.2 | % | 75.5 | % | |||||||||||||||
Woods Staton(3)
|
3,782,424 | 2.9 | % | — | — | 1.8 | % | 0.7 | % | |||||||||||||||
Sergio Alonso
|
* | * | — | — | * | * | ||||||||||||||||||
Germán Lemonnier
|
* | * | — | — | * | * | ||||||||||||||||||
Annette Franqui
|
* | * | — | — | * | * | ||||||||||||||||||
Carlos Hernández-Artigas
|
* | * | — | — | * | * | ||||||||||||||||||
Juan David Bastidas
|
* | * | — | — | * | * | ||||||||||||||||||
José Valledor Rojo
|
* | * | — | — | * | * | ||||||||||||||||||
José Fernandez
|
* | * | — | — | * | * | ||||||||||||||||||
Juan Carlos Paba
|
* | * | — | — | * | * | ||||||||||||||||||
Marcelo Rabach
|
* | * | — | — | * | * | ||||||||||||||||||
Sebastian Magnasco
|
* | * | — | — | * | * | ||||||||||||||||||
Raul Mandía
|
* | * | — | — | * | * | ||||||||||||||||||
Pablo Rodriguez de la Torre
|
* | * | — | — | * | * | ||||||||||||||||||
Flavia Vigio
|
* | * | — | — | * | * | ||||||||||||||||||
Horacio Sbrolla
|
* | * | — | — | * | * | ||||||||||||||||||
Marlene Fernandez
|
* | * | — | — | * | * |
*
|
Each of these directors and officers beneficially owns less than 1% of the total number of outstanding class A shares.
|
(1)
|
Class A shares are entitled to one vote per share and class B shares are entitled to five votes per share.
|
(2)
|
Los Laureles Ltd. is beneficially owned by Mr. Staton, our Chairman and CEO. See “Item 7. Major Shareholders and Related Party Transactions—A. Major Shareholders—Los Laureles Ltd.”
|
(3)
|
In addition to the class B shares he beneficially owns through Los Laureles Ltd., Mr. Staton beneficially owns class A shares through direct and indirect ownership. On a combined basis, Mr. Staton is the beneficial owner of an aggregate of 40.0% of our total economic interests and 76.3% of our total voting interests.
|
Shareholder
|
Class A Shares
|
% of Outstanding Class A Shares
|
Class B Shares
|
% of Outstanding Class B Shares
|
Total Economic Interest
|
Total Voting Interest(1)
|
||||||||||||||||||
Los Laureles Ltd(2)(3).
|
— | — | 80,000,000 | 100.0 | % | 38.2 | % | 75.5 | % | |||||||||||||||
Woods Staton(3)
|
3,782,424 | 2.9 | % | — | — | 1.8 | % | 0.7 | % | |||||||||||||||
Capital World Investors(4)
|
15,218,352 | 11.7 | % | — | — | 7.3 | % | 2.9 | % | |||||||||||||||
Massachusetts Financial Services Company(5)
|
14,503,395 | 11.2 | % | — | — | 6.9 | % | 2.7 | % | |||||||||||||||
Capital Group International, Inc.(6)
|
13,829,432 | 10.7 | % | — | — | 6.6 | % | 2.6 | % | |||||||||||||||
Baillie Gifford & Co(7)
|
9,424,141 | 7.3 | % | — | — | 4.5 | % | 1.8 | % | |||||||||||||||
Artisan Partners Holdings LP, Artisan Investment Corporation, Artisan Partners Limited Partnership, Artisan Investments GP LLC, ZFIC, Inc., Andrew A. Ziegler and Carlene M. Ziegler(8)
|
6,876,322 | 5.3 | % | — | — | 3.3 | % | 1.3 | % | |||||||||||||||
Public
|
65,895,346 | 50.9 | % | — | — | 31.4 | % | 12.4 | % | |||||||||||||||
Total
|
129,529,412 | 100.0 | % | 80,000,000 | 100.0 | % | 100.0 | % | 100.0 | %(9) |
(1)
|
Class A shares are entitled to one vote per share and class B shares are entitled to five votes per share.
|
(2)
|
The address of Los Laureles Ltd. is 325 Waterfront Drive, Omar Hodge Building, 2
nd
Floor, Wickhams Cay 1, Road Town, Tortola, British Virgin Islands. Los Laureles Ltd. is beneficially owned by Mr. Staton, our Chairman and CEO. Los Laureles Ltd. established a voting trust with respect to the voting interests in us held by Los Laureles Ltd. Los Laureles Ltd. is the beneficiary of the voting trust. See “—Los Laureles Ltd.”
|
(3)
|
In addition to the class B shares he beneficially owns through Los Laureles Ltd., Mr. Staton beneficially owns class A shares through direct and indirect ownership. On a combined basis, Mr. Staton is the beneficial owner of an aggregate of 40.0% of the total economic interests of Arcos Dorados and 76.3% of its total voting interests.
|
(4)
|
Capital World Investors, a division of Capital Research and Management Company (CRMC), filed with the SEC a Schedule 13G/A dated February 7, 2013. Based solely on the disclosure set forth in such Schedule 13G/A, Capital World Investors has sole voting power with respect to 15,218,352 class A shares and sole dispositive power with respect to 15,218,352 class A shares, but has disclaimed beneficial ownership of these class A shares. Capital World Investors is deemed to be the beneficial owner of these class A shares as a result of CRMC acting as investment adviser to various investment companies registered under Section 8 of the Investment Company Act of 1940. The address of Capital World Investors is 333 South Hope Street, Los Angeles, CA 90071.
|
(5)
|
Massachusetts Financial Services Company filed with the SEC a Schedule 13G/A dated April 3, 2013. Based solely on the disclosure set forth in such Schedule 13G/A, Massachusetts Financial Services Company has sole voting power with respect to 14,164,641 class A shares and sole dispositive power with respect to 14,503,395 class A shares. The address of Massachusetts Financial Services Company is 111 Huntington Avenue, Boston, MA 02199.
|
(6)
|
Capital Group International, Inc. filed with the SEC a Schedule 13G/A dated March 8, 2013. Based solely on the disclosure set forth in such Schedule 13G/A, Capital Group International, Inc. has sole voting power with respect to 13,289,332 class A shares and sole dispositive power with respect to 13,829,432 class A shares, but Capital Group International, Inc. has disclaimed beneficial ownership of these class A shares. Capital Group International, Inc. is the parent holding company of a group of investment management companies that hold investment power and, in some cases, voting power over the class A shares reported in such Schedule 13G/A. The address of Capital Group International, Inc. is 11100 Santa Monica Blvd., Los Angeles, CA 90025.
|
(7)
|
Baillie Gifford & Co, a Scottish partnership, filed with the SEC a Schedule 13G/A dated February 11, 2013. Based solely on the disclosure set forth in such Schedule 13G/A, Baillie Gifford & Co has sole voting power with respect to 7,972,640 class A shares and sole dispositive power with respect to 9,424,141 class A shares. Securities reported on such Schedule 13G/A as being beneficially owned by Baillie Gifford & Co are held by Baillie Gifford & Co and/or one or more of its investment adviser subsidiaries, which may include Baillie Gifford Overseas Limited, on behalf of investment advisory clients, which may include investment companies registered under the Investment Company Act, employee benefit plans, pension funds or other institutional clients. The address of Baillie Gifford & Co is Calton Square, 1 Greenside Row, Edinburgh EH1 3AN, Scotland, UK.
|
(8)
|
Artisan Partners Holdings LP, Artisan Investment Corporation, Artisan Partners Limited Partnership, Artisan Investments GP LLC, ZFIC, Inc., Andrew A. Ziegler and Carlene M. Ziegler filed with the SEC a Schedule 13G dated February 6, 2013. Based solely on the disclosure set forth in such Schedule 13G, Artisan Partners Holdings LP, Artisan Investment Corporation, Artisan Partners Limited Partnership, Artisan Investments GP LLC, ZFIC, Inc., Andrew A. Ziegler and Carlene M. Ziegler have shared voting power with respect to 5,718,505 class A shares and shared dispositive power with respect to 6,876,322 class A shares. The address of Artisan Partners Holdings LP, Artisan Investment Corporation, Artisan Partners Limited Partnership, Artisan Investments GP LLC and ZFIC, Inc., Andrew A. Ziegler and Carlene M. Ziegler is 875 East Wisconsin Avenue, Suite 800, Milwaukee, WI 53202.
|
(9)
|
Does not sum due to rounding.
|
|
·
|
our commitment to implement a fixed work schedule in the states of Sergipe, Espírito Santo, Bahia, Santa Catarina and Rio Grande do Sul;
|
|
·
|
our commitment to comply with overtime payment, breaks between workdays, night shift premiums, duration of breaks, and weekly rest time requirements, among others requirements;
|
|
·
|
a reduction of the fine for proved alleged noncompliance with the abovementioned items from R$3,000 to R$2,000 per employee per month;
|
|
·
|
a reduction of the penalty for the non-exhibition of documentation relating to audit labor inspections from R$20,000 to R$2,000;
|
|
·
|
the temporary stay for 60 days of the requirement to allow employees to bring their own meals;
|
|
·
|
non-recognition of collective damages, provided that we will pay an amount of R$1.5 million in cash to the states of Pernambuco, Rio de Janeiro and Paraná (R$0.5 million each) on June 21, 2013 and we will incur an aggregate amount of R$6.0 million over the course of four years (R$1.5 million in January of each of 2014, 2015, 2016 and 2017) in advertising as part of a national communications campaign for educational or health purposes that will be determined by the Public Labor Ministry of the State of Pernambuco by June 2013.
|
Low
|
High
|
|||||||
Year Ended December 31:
|
||||||||
2011 (since April 14, 2011)
|
$ | 19.55 | $ | 28.52 | ||||
2012
|
$ | 10.73 | $ | 22.94 | ||||
Year Ended December 31, 2011:
|
||||||||
Second Quarter (since April 14, 2011)
|
$ | 20.15 | $ | 24.73 | ||||
Third Quarter
|
$ | 19.98 | $ | 28.52 | ||||
Fourth Quarter
|
$ | 19.55 | $ | 25.74 | ||||
Year Ended December 31, 2012:
|
||||||||
First Quarter
|
$ | 17.85 | $ | 22.94 | ||||
Second Quarter
|
$ | 12.39 | $ | 19.02 | ||||
Third Quarter
|
$ | 12.22 | $ | 15.49 | ||||
Fourth Quarter
|
$ | 10.73 | $ | 15.83 | ||||
Year Ended December 31, 2013:
|
||||||||
First Quarter
|
$ | 12.19 | $ | 14.25 | ||||
Month Ended:
|
||||||||
October 31, 2012
|
$ | 12.91 | $ | 15.83 | ||||
November 30, 2012
|
$ | 10.73 | $ | 12.89 | ||||
December 31, 2012
|
$ | 11.83 | $ | 12.64 | ||||
January 31, 2013
|
$ | 12.31 | $ | 13.95 | ||||
February 28, 2013
|
$ | 12.67 | $ | 14.25 | ||||
March 31, 2013
|
$ | 12.19 | $ | 13.70 | ||||
April 30, 2013 (through April 24)
|
$ | 12.13 | $ | 12.55 |
|
·
|
each holder of class A shares is entitled to one vote per share on all matters to be voted on by shareholders generally, including the election of directors;
|
|
·
|
holders of class A shares vote together with holders of class B shares;
|
|
·
|
there are no cumulative voting rights;
|
|
·
|
the holders of our class A shares are entitled to dividends and other distributions,
pari passu
with our class B shares, as may be declared from time to time by our board of directors out of funds legally available for that purpose, if any, and pursuant to our memorandum and articles of association, all dividends unclaimed for three years after having been declared may be forfeited by a resolution of directors for the benefit of the Company;
|
|
·
|
upon our liquidation, dissolution or winding up, the holders of class A shares will be entitled to share ratably,
pari passu
with our class B shares, in the distribution of all of our assets remaining available for distribution after satisfaction of all our liabilities; and
|
|
·
|
the holders of class A shares have preemptive rights in connection with the issuance of any securities by us, except for certain issuances of securities by us, including (i) pursuant to any employee compensation plans; (ii) as consideration for (a) any merger, consolidation or purchase of assets or (b) recapitalization or reorganization; (iii) in connection with a pro rata division of shares or dividend in specie or distribution; or (iv) in a bona fide public offering that has been registered with the SEC, but they are not entitled to the benefits of any redemption or sinking fund provisions.
|
|
·
|
each holder of class B shares is entitled to five votes per share on all matters to be voted on by shareholders generally, including the election of directors;
|
|
·
|
holders of class B shares vote together with holders of class A shares;
|
|
·
|
class B shares may not be listed on any U.S. or foreign national or regional securities exchange or market;
|
|
·
|
there are no cumulative voting rights;
|
|
·
|
the holders of our class B shares are entitled to dividends and other distributions,
pari passu
with our class A shares, as may be declared from time to time by our board of directors out of funds legally available for that purpose, if any, and pursuant to our memorandum and articles of association, all dividends unclaimed for three years after having been declared may be forfeited by a resolution of directors for the benefit of the Company;
|
|
·
|
upon our liquidation, dissolution or winding up, the holders of class B shares will be entitled to share ratably,
pari passu
with our class A shares, in the distribution of all of our assets remaining available for distribution after satisfaction of all our liabilities;
|
|
·
|
the holders of class B shares have preemptive rights in connection with the issuance of any securities by us, except for certain issuances of securities by us, including (i) pursuant to any employee compensation plans; (ii) as consideration for (a) any merger, consolidation or purchase of assets or (b) recapitalization or reorganization; (iii) in connection with a pro rata division of shares or dividend in specie or distribution; or
|
|
|
(iv) in a bona fide public offering that has been registered with the SEC, but they are not entitled to the benefits of any redemption or sinking fund provisions;
|
|
·
|
each class B share is convertible into one class A share at the option of the holder at any time, subject to the prior written approval of McDonald’s; and
|
|
·
|
each class B share will convert automatically into one class A share at such time as the holders of class B shares cease to hold, directly or indirectly, at least 20% of the aggregate number of outstanding class A and class B shares.
|
|
·
|
the directors of the Company may convene meetings of shareholders at such times and in such manner and places within or outside the British Virgin Islands as the directors consider necessary or desirable; provided, that at least one meeting of shareholders be held each year;
|
|
·
|
upon the written request of shareholders entitled to exercise 30 percent or more of the voting rights in respect of the matter for which the meeting is requested, the directors are required to convene a meeting of the shareholders. Any such request must state the proposed purpose of the meeting;
|
|
·
|
the directors convening a meeting must give not less than ten days’ notice of a meeting of shareholders to: (i) those shareholders whose names on the date the notice is given appear as shareholders in the register of members of our company and are entitled to vote at the meeting, and (ii) the other directors;
|
|
·
|
a meeting of shareholders held in contravention of the requirement to give notice is valid if shareholders holding at least 90 percent of the total voting rights on all the matters to be considered at the meeting have waived notice of the meeting and, for this purpose, the presence of a shareholder at the meeting shall constitute waiver in relation to all the shares that such shareholder holds;
|
|
·
|
a shareholder may be represented at a meeting of shareholders by a proxy who may speak and vote on behalf of the shareholder;
|
|
·
|
a meeting of shareholders is duly constituted if, at the commencement of the meeting, there are present in person or by proxy not less than 50 percent of the votes of the shares or class or series of shares entitled to vote on resolutions of shareholders to be considered at the meeting;
|
|
·
|
if within two hours from the time appointed for the meeting a quorum is not present, the meeting, if convened upon the requisition of shareholders, shall be dissolved; in any other case it shall be adjourned to the next business day in the jurisdiction in which the meeting was to have been held at the same time and place or to such other date, time and place as the directors may determine, and if at the adjourned meeting there are present within one hour from the time appointed for the meeting in person or by proxy not less than one third of the votes of the shares or each class or series of shares entitled to vote on the matters to be considered by the meeting, those present shall constitute a quorum but otherwise the meeting shall be dissolved. Notice of the adjourned meeting need not be given if the date, time and place of such meeting are announced at the meeting at which the adjournment is taken;
|
|
·
|
a resolution of shareholders is valid (i) if approved at a duly convened and constituted meeting of shareholders by the affirmative vote of a majority of the votes of the shares entitled to vote thereon which were present at the meeting and were voted, or (ii) if it is a resolution consented to in writing by a majority of the votes of shares entitled to vote thereon; and
|
|
·
|
an action that may be taken by the shareholders at a meeting may also be taken by a resolution of shareholders consented to in writing by a majority of the votes of shares entitled to vote thereon, without the need for any notice, but if any resolution of shareholders is adopted otherwise than by unanimous written consent of all shareholders, a copy of such resolution shall forthwith be sent to all shareholders not consenting to such resolution.
|
|
(a)
|
the memorandum and articles;
|
|
(b)
|
the register of members;
|
|
(c)
|
the register of directors; and
|
|
(d)
|
the minutes of meetings and resolutions of members and of those classes of members of which he is a member; and to make copies of or take extracts from the documents and records referred to in (a) to (d) above. Subject to the memorandum and articles, the directors may, if they are satisfied that it would be contrary to the company’s interests to allow a member to inspect any document, or part of a document,
|
|
|
specified in (b), (c) or (d) above, refuse to permit the member to inspect the document or limit the inspection of the document, including limiting the making of copies or the taking of extracts from the records.
|
|
·
|
if the relevant final price is greater than the then-current reference price, we will realize a gain in respect of the relevant number of notional shares subject to such settlement (and GSI will make a cash payment to us in an amount equal to such gain); and
|
|
·
|
if the relevant final price is less than the then-current reference price, we will realize a loss in respect of the relevant number of notional shares subject to such settlement (and we will make a cash payment to GSI in an amount equal to such loss).
|
|
·
|
certain financial institutions;
|
|
·
|
dealers or traders in securities who use a mark-to-market method of tax accounting;
|
|
·
|
persons holding class A shares as part of a hedge, “straddle,” wash sale, conversion transaction or integrated transaction or persons entering into a constructive sale with respect to the class A shares;
|
|
·
|
persons whose “functional currency” for U.S. federal income tax purposes is not the U.S. dollar;
|
|
·
|
tax exempt entities, including “individual retirement accounts” and “Roth IRAs”;
|
|
·
|
entities classified as partnerships for U.S. federal income tax purposes;
|
|
·
|
persons that own or are deemed to own ten percent or more of our voting shares;
|
|
·
|
persons who acquired our class A shares pursuant to the exercise of an employee stock option or otherwise as compensation; or
|
|
·
|
persons holding class A shares in connection with a trade or business conducted outside the United States.
|
|
·
|
pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect transactions and dispositions of our assets;
|
|
·
|
provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements, in accordance with generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with authorization of our management and directors; and
|
|
·
|
provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our financial statements.
|
/s/ Pistrelli, Henry Martin y Asociados S.R.L.
|
|
PISTRELLI, HENRY MARTIN Y ASOCIADOS S.R.L.
|
|
Member of Ernst & Young Global
|
2012
|
2011
|
|||||||
(in thousands of U.S. dollars)
|
||||||||
Audit fees
|
2,824 | 2,803 | ||||||
Audit-related fees
|
65 | 22 | ||||||
Tax fees
|
921 | 1,473 | ||||||
All other fees
|
7 | 737 |
2012 |
Total Number of Class A Shares Purchased
|
Average Price Paid per Class A Share
in U.S.$
|
Total Number of Class A Shares Purchased as Part of Publicly Announced Plans or Programs
|
Maximum Number (or Approximate Dollar Value) of Class A Shares that May Yet Be Purchased Under the Plans or Programs
|
||||||||||||
January 1 to January 31
|
— | — | — | — | ||||||||||||
February 1 to February 28
|
— | — | — | — | ||||||||||||
March 1 to March 31
|
— | — | — | — | ||||||||||||
April 1 to April 30
|
— | — | — | — | ||||||||||||
May 1 to May 31
|
— | — | — | — | ||||||||||||
June 1 to June 30
|
— | — | — | — | ||||||||||||
July 1 to July 31
|
— | — | — | — | ||||||||||||
August 1 to August 31
|
2,272,551 | (1) | 13.77 | — | — | |||||||||||
September 1 to September 30
|
— | — | — | — | ||||||||||||
October 1 to October 31
|
— | — | — | — | ||||||||||||
November 1 to November 30
|
— | — | — | — | ||||||||||||
December 1 to December 31
|
— | — | — | — | ||||||||||||
Total
|
2,272,551 | (1) | 13.77 | — | — |
(1)
|
Represents class A shares purchased in open-market transactions in connection with the swap transaction among us, our subsidiary Arcos Dorados B.V. and Goldman Sachs International. See “Item 10. Additional Information—C. Material Contracts—The 2012 Swap Transaction.”
|
1.1
|
Memorandum and Articles of Association, incorporated herein by reference to Exhibit 3.1 to the Company’s Registration Statement on Form F-1 (File No. 333-173063) filed with the SEC on March 25, 2011.
|
||
2.1
|
Indenture dated July 13, 2011 among Arcos Dorados Holdings Inc., as issuer, the subsidiary guarantors named therein, Citibank N.A., as trustee, calculation agent, registrar, paying agent and transfer agent, and Dexia Banque Internationale à Luxembourg, Société Anonyme, as Luxembourg paying agent, incorporated herein by reference to Exhibit 4.2 to the Company’s Registration Statement on Form F-1 (File No. 333-177210) filed with the SEC on October 7, 2011.
|
||
2.2
|
Indenture dated October 1, 2009 among Arcos Dorados B.V., the Subsidiary Guarantors named therein and Citibank N.A., as trustee, incorporated herein by reference to Exhibit 4.1 to the Company’s Registration Statement on Form F-1 (File No. 333-173063) filed with the SEC on March 25, 2011.
|
||
3.1
|
Los Laureles Voting Trust, incorporated herein by reference to Exhibit 9.1 to the Company’s Registration Statement on Form F-1 (File No. 333-173063) filed with the SEC on March 25, 2011.
|
||
4.1
|
Amended and Restated Master Franchise Agreement for McDonald’s Restaurants in All of the Territories, except Brazil, incorporated herein by reference to Exhibit 10.1 to the Company’s Registration Statement on Form F-1 (File No. 333-173063) filed with the SEC on March 25, 2011.
|
||
4.2
|
Amendment No. 1 to the Amended and Restated Master Franchise Agreement for McDonald’s Restaurants in All of the Territories, except Brazil, incorporated herein by reference to Exhibit 10.2 to the Company’s Registration Statement on Form F-1 (File No. 333-173063) filed with the SEC on March 25, 2011.
|
||
4.3
|
Second Amended and Restated Master Franchise Agreement for McDonald’s Restaurants in Brazil, incorporated herein by reference to Exhibit 10.3 to the Company’s Registration Statement on Form F-1 (File No. 333-173063) filed with the SEC on March 25, 2011.
|
||
4.4
|
Amended and Restated Escrow Agreement dated October 12, 2010 among McDonald’s Latin America, LLC, LatAm, LLC, each of the Escrowed MF Subsidiaries, Arcos Dorados Restaurantes de Chile Ltda., Arcos Dorados B.V., Deutsche Bank Trust Company Americas, as collateral agent, and Citibank, N.A., as escrow agent, incorporated herein by reference to Exhibit 10.4 to the Company’s Registration Statement on Form F-1 (File No. 333-173063) filed with the SEC on March 25, 2011.
|
||
4.5
|
Letter of Credit Reimbursement Agreement dated August 3, 2007 between Arcos Dorados B.V. and Credit Suisse, acting through its Cayman Islands Branch, incorporated herein by reference to Exhibit 10.5 to the Company’s Registration Statement on Form F-1 (File No. 333-173063) filed with the SEC on March 25, 2011.
|
||
4.6
|
Amendment to Letter of Credit Reimbursement Agreement dated November 3, 2008 between Arcos Dorados B.V. and Credit Suisse, acting through its Cayman Islands Branch, incorporated herein by reference to Exhibit 10.6 to the Company’s Registration Statement on Form F-1 (File No. 333-173063) filed with the SEC on March 25, 2011.
|
||
4.7
|
Second Amendment to Letter of Credit Reimbursement Agreement dated December 10, 2008 between Arcos Dorados B.V. and Credit Suisse, acting through its Cayman Islands Branch, incorporated herein by reference to Exhibit 10.7 to the Company’s Registration Statement on Form F-1 (File No. 333-173063) filed with the SEC on March 25, 2011.
|
||
4.8
|
Third Amendment to Letter of Credit Reimbursement Agreement dated July 8, 2009 between Arcos Dorados B.V. and Credit Suisse, acting through its Cayman Islands Branch, incorporated herein by reference to Exhibit 10.8 to the Company’s Registration Statement on Form F-1 (File No. 333-173063) filed with the SEC on March 25, 2011.
|
||
4.9
|
Fourth Amendment to Letter of Credit Reimbursement Agreement dated April 23, 2010 between Arcos Dorados B.V. and Credit Suisse AG, Cayman Islands Branch, incorporated herein by reference to Exhibit 10.9 to the Company’s Registration Statement on Form F-1 (File No. 333-173063) filed with the SEC on March 25, 2011.
|
||
4.10
|
ISDA Schedule to the 2002 Master Agreement dated as of December 14, 2009 between Morgan Stanley & Co. International plc and Arcos Dorados B.V., incorporated herein by reference to Exhibit 10.16 to the Company’s Registration Statement on Form F-1(File No. 333-173063) filed with the SEC on March 25, 2011.
|
||
4.11
|
ISDA Schedule to the 2002 Master Agreement dated as of December 14, 2009 between JPMorgan Chase Bank, N.A. and Arcos Dorados B.V., incorporated herein by reference to Exhibit 10.19 to the Company’s Registration Statement on Form F-1 (File No. 333-173063) filed with the SEC on March 25, 2011.
|
4.12
|
Credit Support Annex to the Schedule to the Master Agreement dated as of December 14, 2009 between JPMorgan Chase Bank, N.A. and Arcos Dorados B.V., incorporated herein by reference to Exhibit 10.20 to the Company’s Registration Statement on Form F-1 (File No. 333-173063) filed with the SEC on March 25, 2011.
|
||
4.13
|
Equity Incentive Plan, incorporated herein by reference to Exhibit 10.23 to the Company’s Registration Statement on Form F-1 (File No. 333-173063) filed with the SEC on March 25, 2011.
|
||
4.14
|
Amendment No. 2 to the Amended and Restated Master Franchise Agreement for McDonald’s Restaurants in All of the Territories, except Brazil, incorporated herein by reference to Exhibit 10.17 to the Company’s Registration Statement on Form F-1 (File No. 333-177210) filed with the SEC on October 7, 2011.
|
||
4.15
|
Confirmation dated August 13, 2012 among Goldman Sachs International, Arcos Dorados B.V. and Arcos Dorados Holdings Inc., incorporated herein by reference to Exhibit 10.1 to the Company’s Registration Statement on Form F-3 (File No. 333-187531) filed with the SEC on March 26, 2013.
|
||
4.16
|
Amendment to Share Swap Transaction Confirmation dated October 22, 2012 among Goldman Sachs International, Arcos Dorados B.V. and Arcos Dorados Holdings Inc., incorporated herein by reference to Exhibit 10.2 to the Company’s Registration Statement on Form F-3 (File No. 333-187531) filed with the SEC on March 26, 2013.
|
||
4.17
|
Amendment No. 2 to Share Swap Transaction Confirmation dated November 28, 2012 among Goldman Sachs International, Arcos Dorados B.V. and Arcos Dorados Holdings Inc., incorporated herein by reference to Exhibit 10.3 to the Company’s Registration Statement on Form F-3 (File No. 333-187531) filed with the SEC on March 26, 2013.
|
||
4.18*
|
Amendment No. 3 to Share Swap Transaction Confirmation dated April 4, 2013 among Goldman Sachs International, Arcos Dorados B.V. and Arcos Dorados Holdings Inc.
|
||
4.19*
|
ISDA Master Agreement dated as of April 20, 2012 between Bank of America, N.A. and Arcos Dorados Holdings Inc.
|
||
4.20*
|
ISDA Schedule to the 2012 Master Agreement dated as of April 20, 2012 between Bank of America, N.A. and Arcos Dorados Holdings Inc.
|
||
4.21*
|
Guarantee dated as of April 20, 2012 of Arcos Dourados Comercio de Alimentos Ltda. in favor of Bank of America, N.A. in connection with the ISDA Master Agreement and Schedule thereto, each dated as of April 20, 2012, and any confirmations thereunder.
|
||
4.22*
|
Confirmation dated June 8, 2012 between Arcos Dorados Holdings Inc. and Bank of America, N.A.
|
||
4.23*
|
Credit Agreement dated as of August 3, 2011 among Arcos Dorados B.V., as borrower, certain subsidiaries of the borrower, as guarantors, and Bank of America, N.A., as lender.
|
||
4.24*
|
First Amendment to Credit Agreement dated as of August 3, 2012 among Arcos Dorados B.V., as borrower, certain subsidiaries of the borrower, as guarantors, and Bank of America, N.A., as lender.
|
||
8.1*
|
List of subsidiaries.
|
||
12.1*
|
Certification of the Chief Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934.
|
||
12.2*
|
Certification of the Chief Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934.
|
||
13.1*
|
Certification of the Chief Executive Officer pursuant to Rule 13a-14(b) of the Securities Exchange Act of 1934 and Section 1350 of Chapter 63 of Title 18 of the United States Code.
|
||
13.2*
|
Certification of the Chief Financial Officer pursuant to Rule 13a-14(b) of the Securities Exchange Act of 1934 and Section 1350 of Chapter 63 of Title 18 of the United States Code.
|
||
15.1*
|
Consent of Euromonitor International Ltd.
|
||
15.2*
|
Consent of Pistrelli, Henry Martin y Asociados S.R.L., member firm of Ernst & Young Global, independent registered public accounting firm.
|
||
101.INS**
|
XBRL Instance Document
|
||
101.SCH**
|
XBRL Taxonomy Extension Schema Document
|
||
101.CAL**
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
||
101.DEF**
|
XBRL Taxonomy Extension Definition Linkbase Document
|
||
101.LAB**
|
XBRL Taxonomy Extension Label Linkbase Document
|
||
101.PRE**
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
*
|
Filed with this Annual Report on Form 20-F.
|
**
|
As permitted by Rule 405(a)(2)(ii) of Regulation S-T, the registrant’s XBRL (eXtensible Business Reporting Language) information will be furnished in an amendment to this Form 20-F that will be filed no more than 30 days after the date hereof. In accordance with Rule 406T(b)(2) of Regulation S-T, such XBRL information will be furnished and not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, will be deemed not filed for purposes of Section 18 of the Exchange Act of 1934, as amended, and otherwise will not be subject to liability under those sections.
|
Arcos Dorados Holdings Inc.
|
|||
By:
|
/s/ Germán Lemonnier
|
||
Name:
|
Germán Lemonnier
|
||
Title:
|
Chief Financial Officer
|
F-2
|
|
F-3
|
|
F-4
|
|
F-5
|
|
F-6
|
|
F-7
|
|
F-8
|
/s/ Pistrelli, Henry Martin y Asociados S.R.L.
|
||
PISTRELLI, HENRY MARTIN Y ASOCIADOS S.R.L.
|
||
Member of Ernst & Young Global
|
REVENUES
|
2012
|
2011
|
2010
|
|||||||||
Sales by Company-operated restaurants
|
$3,634,371 | $3,504,128 | $2,894,466 | |||||||||
Revenues from franchised restaurants
|
163,023 | 153,521 | 123,652 | |||||||||
Total revenues
.
|
3,797,394 | 3,657,649 | 3,018,118 | |||||||||
OPERATING COSTS AND EXPENSES
|
||||||||||||
Company-operated restaurant expenses:
|
||||||||||||
Food and paper
|
(1,269,146 | ) | (1,216,141 | ) | (1,023,464 | ) | ||||||
Payroll and employee benefits
|
(753,120 | ) | (701,278 | ) | (569,084 | ) | ||||||
Occupancy and other operating expenses
|
(984,004 | ) | (918,102 | ) | (765,777 | ) | ||||||
Royalty fees
|
(180,547 | ) | (170,400 | ) | (140,973 | ) | ||||||
Franchised restaurants – occupancy expenses
|
(56,057 | ) | (51,396 | ) | (37,634 | ) | ||||||
General and administrative expenses
|
(314,619 | ) | (334,914 | ) | (254,165 | ) | ||||||
Other operating expenses, net
|
(3,261 | ) | (14,665 | ) | (22,464 | ) | ||||||
Total operating costs and expenses
|
(3,560,754 | ) | (3,406,896 | ) | (2,813,561 | ) | ||||||
Operating income
|
236,640 | 250,753 | 204,557 | |||||||||
Net interest expense
|
(54,247 | ) | (60,749 | ) | (41,613 | ) | ||||||
Loss from derivative instruments
|
(891 | ) | (9,237 | ) | (32,809 | ) | ||||||
Foreign currency exchange results
|
(18,420 | ) | (23,926 | ) | 3,237 | |||||||
Other non-operating (expenses) income, net
|
(2,119 | ) | 3,562 | (23,630 | ) | |||||||
Income before income taxes
|
160,963 | 160,403 | 109,742 | |||||||||
Income tax expense
|
(46,375 | ) | (44,603 | ) | (3,450 | ) | ||||||
Net income
|
114,588 | 115,800 | 106,292 | |||||||||
Less: Net income attributable to non-controlling interests
|
(256 | ) | (271 | ) | (271 | ) | ||||||
Net income attributable to Arcos Dorados Holdings Inc.
|
$114,332 | $115,529 | $106,021 | |||||||||
Earnings per share information: | ||||||||||||
Basic net income per common share attributable to Arcos Dorados Holdings Inc. | $0.55 | $0.54 | $0.44 | |||||||||
Diluted net income per common share attributable to Arcos Dorados Holdings Inc. | 0.55 | 0.54 | 0.44 |
2012
|
2011
|
2010
|
||||||||||
Net income
|
$114,588 | $115,800 | $106,292 | |||||||||
Other comprehensive income (loss), net of tax:
|
||||||||||||
Foreign currency translation (including $13,100 of income taxes in 2010)
|
(8,104 | ) | (50,826 | ) | 29,927 | |||||||
Unrecognized prior service cost of post-employment benefits (net of $624 of income taxes in 2012)
|
(1,213 | ) | - | - | ||||||||
Unrealized results on cash flow hedges:
|
||||||||||||
Unrealized net (losses) gains on cash flow hedges (net of $nil of income taxes)
|
(4,195 | ) | 131 | (1,134 | ) | |||||||
Plus: reclassification adjustment for net losses included in net income (net of $nil of income taxes)
|
3,101 | 451 | 273 | |||||||||
Unrealized results on cash flow hedges
|
(1,094 | ) | 582 | (861 | ) | |||||||
Total other comprehensive (loss) income
|
(10,411 | ) | (50,244 | ) | 29,066 | |||||||
Comprehensive income
|
104,177 | 65,556 | 135,358 | |||||||||
(Less) Plus: Comprehensive (income) expense attributable to non-controlling interests
|
(277 | ) | 248 | (212 | ) | |||||||
Comprehensive income attributable to Arcos Dorados Holdings Inc.
|
$103,900 | $65,804 | $135,146 |
ASSETS
|
2012
|
2011
|
||||||
Current assets
|
||||||||
Cash and cash equivalents
|
$ | 184,851 | $ | 176,301 | ||||
Accounts and notes receivable, net
|
105,019 | 93,862 | ||||||
Other receivables
|
131,747 | 66,605 | ||||||
Inventories
|
54,824 | 50,729 | ||||||
Prepaid expenses and other current assets
|
101,148 | 140,654 | ||||||
Derivative instruments
|
1,731 | - | ||||||
Deferred income taxes
|
22,178 | 36,713 | ||||||
McDonald’s Corporation’s indemnification for contingencies
|
- | 23,750 | ||||||
Total current assets
|
601,498 | 588,614 | ||||||
Non-current assets
|
||||||||
Miscellaneous
|
59,304 | 44,879 | ||||||
Collateral deposits
|
5,325 | 5,325 | ||||||
Property and equipment, net
|
1,176,350 | 1,023,180 | ||||||
Net intangible assets and goodwill
|
67,271 | 58,419 | ||||||
Deferred income taxes
|
133,708 | 142,848 | ||||||
McDonald’s Corporation’s indemnification for contingencies
|
5,707 | 12,141 | ||||||
Total non-current assets
|
1,447,665 | 1,286,792 | ||||||
Total assets
|
$ | 2,049,163 | $ | 1,875,406 | ||||
LIABILITIES AND EQUITY
|
||||||||
Current liabilities
|
||||||||
Accounts payable
|
$ | 244,365 | $ | 220,941 | ||||
Royalties payable to McDonald’s Corporation
|
29,278 | 19,002 | ||||||
Income taxes payable
|
21,051 | 50,379 | ||||||
Other taxes payable
|
104,662 | 88,610 | ||||||
Accrued payroll and other liabilities
|
150,690 | 146,721 | ||||||
Provision for contingencies
|
507 | 41,959 | ||||||
Interest payable
|
21,567 | 16,028 | ||||||
Short-term debt
|
568 | 840 | ||||||
Current portion of long-term debt
|
1,634 | 2,971 | ||||||
Derivative instruments
|
3,952 | 1,841 | ||||||
Total current liabilities
|
578,274 | 589,292 | ||||||
Non-current liabilities
|
||||||||
Accrued payroll and other liabilities
|
40,115 | 52,065 | ||||||
Provision for contingencies
|
20,092 | 23,077 | ||||||
Long-term debt, excluding current portion
|
649,968 | 525,951 | ||||||
Derivative instruments
|
5,397 | 742 | ||||||
Deferred income taxes
|
9,007 | 4,650 | ||||||
Total non-current liabilities
|
724,579 | 606,485 | ||||||
Total liabilities
|
1,302,853 | 1,195,777 | ||||||
Equity
|
||||||||
Class A shares - no par value common stock; 420,000,000 shares authorized, 129,529,412 shares issued and outstanding at December 31, 2012 and 2011
|
351,654 | 351,654 | ||||||
Class B shares - no par value common stock; 80,000,000 shares authorized, issued and outstanding at December 31, 2012 and 2011
|
132,915 | 132,915 | ||||||
Additional paid-in capital
|
18,634 | 5,734 | ||||||
Retained earnings
|
400,761 | 336,707 | ||||||
Accumulated other comprehensive loss
|
(158,821 | ) | (148,389 | ) | ||||
Total Arcos Dorados Holdings Inc. shareholders’ equity
|
745,143 | 678,621 | ||||||
Non-controlling interests in subsidiaries
|
1,167 | 1,008 | ||||||
Total equity
|
746,310 | 679,629 | ||||||
Total liabilities and equity
|
$ | 2,049,163 | $ | 1,875,406 |
2012
|
2011
|
2010
|
||||||||||
Operating activities
|
||||||||||||
Net income attributable to Arcos Dorados Holdings Inc.
|
$ | 114,332 | $ | 115,529 | $ | 106,021 | ||||||
Adjustments to reconcile net income attributable to Arcos Dorados Holdings Inc. to cash provided by operations:
|
||||||||||||
Non-cash charges and credits:
|
||||||||||||
Depreciation and amortization
|
92,328 | 68,971 | 60,585 | |||||||||
Loss from derivative instruments
|
891 | 9,237 | 32,809 | |||||||||
Amortization of deferred financing costs
|
1,314 | 3,316 | 979 | |||||||||
Amortization and accrual of letter of credit fees
|
3,028 | 2,847 | 2,633 | |||||||||
Net income attributable to non-controlling interests
|
256 | 271 | 271 | |||||||||
Deferred income taxes
|
14,228 | (2,882 | ) | (61,101 | ) | |||||||
Foreign currency exchange results
|
13,788 | 16,209 | (1,072 | ) | ||||||||
Accrued compensation expense
|
1,265 | 29,712 | 36,551 | |||||||||
Loss on amnesty program
|
- | - | 25,532 | |||||||||
Others, net
|
4,860 | 10,289 | 2,009 | |||||||||
Changes in assets and liabilities:
|
||||||||||||
Accounts payable
|
22,575 | 60,234 | 52,077 | |||||||||
Accounts and notes receivable and other receivables
|
(48,168 | ) | (14,609 | ) | (70,762 | ) | ||||||
Inventories, prepaid and other assets
|
14,628 | (42,415 | ) | (39,742 | ) | |||||||
Income taxes payable
|
(23,042 | ) | 17,455 | 13,085 | ||||||||
Other taxes payable
|
8,414 | 6,627 | 12,134 | |||||||||
Interest payable
|
6,134 | 8,961 | 105 | |||||||||
Accrued payroll and other liabilities and provision for contingencies
|
(9,956 | ) | (34,479 | ) | 82,688 | |||||||
Others
|
13,238 | 6,351 | 9,074 | |||||||||
Net cash provided by operating activities
|
230,113 | 261,624 | 263,876 | |||||||||
Investing activities
|
||||||||||||
Property and equipment expenditures
|
(294,478 | ) | (319,859 | ) | (175,669 | ) | ||||||
Purchases of restaurant businesses
|
(6,004 | ) | (5,993 | ) | (504 | ) | ||||||
Proceeds from sale of property and equipment
|
6,643 | 10,681 | 6,215 | |||||||||
Loans to related parties
|
(7,000 | ) | - | - | ||||||||
Other investing activity
|
(5,582 | ) | (4,961 | ) | (8,266 | ) | ||||||
Net cash used in investing activities
|
(306,421 | ) | (320,132 | ) | (178,224 | ) | ||||||
Financing activities
|
||||||||||||
Issuance of class A shares in connection with the initial public offering
|
- | 152,281 | - | |||||||||
Dividend payments to Arcos Dorados Holdings Inc.’ shareholders
|
(50,036 | ) | (56,627 | ) | (33,400 | ) | ||||||
Net payment of derivative instruments
|
(4,322 | ) | (118,932 | ) | (37,815 | ) | ||||||
Collateral deposits
|
- | 15,000 | 25,000 | |||||||||
Cash and cash equivalents of split-off Axis Business
|
- | (35,425 | ) | - | ||||||||
Partial redemption of 2019 Notes
|
- | (152,005 | ) | - | ||||||||
Issuance of 2016 Notes
|
149,658 | 255,102 | - | |||||||||
Net short-term borrowings
|
(157 | ) | (10,871 | ) | 3,805 | |||||||
Other financing activities
|
(4,497 | ) | (12,850 | ) | (8,877 | ) | ||||||
Net cash provided by (used in) financing activities
|
90,646 | 35,673 | (51,287 | ) | ||||||||
Effect of exchange rate changes on cash and cash equivalents
|
(5,788 | ) | (8,963 | ) | 5,759 | |||||||
Increase (Decrease) in cash and cash equivalents
|
8,550 | (31,798 | ) | 40,124 | ||||||||
Cash and cash equivalents at the beginning of the year
|
176,301 | 208,099 | 167,975 | |||||||||
Cash and cash equivalents at the end of the year
|
$ | 184,851 | $ | 176,301 | $ | 208,099 | ||||||
Supplemental cash flow information:
|
||||||||||||
Cash paid during the year for:
|
||||||||||||
Interest
|
$ | 55,347 | $ | 46,022 | $ | 42,034 | ||||||
Income tax
|
30,700 | 50,952 | 40,391 | |||||||||
Non-cash transactions:
|
||||||||||||
Seller financings
|
- | - | 2,423 | |||||||||
Split-off Axis Business – non-cash portion
|
- | 9,833 | - |
Arcos Dorados Holdings Inc.’ Shareholders
|
||||||||||||||||||||||||||||||||||||||||
Class A shares of
common stock
|
Class B shares of
common stock
|
Additional paid-in capital
|
Accumulated other comprehensive income (loss)
|
Non-controlling interests
|
||||||||||||||||||||||||||||||||||||
Number
|
Amount
|
Number
|
Amount
|
Retained earnings
|
Total
|
Total
|
||||||||||||||||||||||||||||||||||
Balances at December 31, 2009
|
145,129,780 | 226,528 | 96,753,186 | 151,018 | (2,468 | ) | 205,366 | (127,789 | ) | 452,655 | 1,391 | 454,046 | ||||||||||||||||||||||||||||
Net income for the year
|
- | - | - | - | - | 106,021 | - | 106,021 | 271 | 106,292 | ||||||||||||||||||||||||||||||
Other comprehensive income
|
- | - | - | - | - | - | 29,125 | 29,125 | (59 | ) | 29,066 | |||||||||||||||||||||||||||||
Dividends to non-controlling interests
|
- | - | - | - | - | - | - | - | (209 | ) | (209 | ) | ||||||||||||||||||||||||||||
Dividends to Arcos Dorados Holdings Inc.’s shareholders ($0.17 per share).
’ Shareholders
|
- | - | - | - | - | (40,000 | ) | - | (40,000 | ) | - | (40,000 | ) | |||||||||||||||||||||||||||
Balances at December 31, 2010
|
145,129,780 | 226,528 | 96,753,186 | 151,018 | (2,468 | ) | 271,387 | (98,664 | ) | 547,801 | 1,394 | 549,195 | ||||||||||||||||||||||||||||
Net income for the year
|
- | - | - | - | - | 115,529 | - | 115,529 | 271 | 115,800 | ||||||||||||||||||||||||||||||
Other comprehensive income
|
- | - | - | - | - | - | (49,725 | ) | (49,725 | ) | (519 | ) | (50,244 | ) | ||||||||||||||||||||||||||
Split-off of Axis Business
|
(25,129,780 | ) | (27,155 | ) | (16,753,186 | ) | (18,103 | ) | - | - | - | (45,258 | ) | - | (45,258 | ) | ||||||||||||||||||||||||
Dividends to Arcos Dorados Holdings Inc.’s shareholders ($0.24 per share)
|
- | - | - | - | - | (50,027 | ) | - | (50,027 | ) | - | (50,027 | ) | |||||||||||||||||||||||||||
Issuance of class A shares in connection with the initial public offering
|
9,529,412 | 152,281 | - | - | - | - | - | 152,281 | - | 152,281 | ||||||||||||||||||||||||||||||
Stock-based compensation related to the 2011 Equity Incentive Plan
|
- | - | - | - | 8,202 | - | - | 8,202 | - | 8,202 | ||||||||||||||||||||||||||||||
Dividends on restricted share units under the 2011 Equity Incentive Plan
|
- | - | - | - | - | (182 | ) | - | (182 | ) | - | (182 | ) | |||||||||||||||||||||||||||
Dividends to non-controlling interests
|
- | - | - | - | - | - | - | - | (138 | ) | (138 | ) | ||||||||||||||||||||||||||||
Balances at December 31, 2011
|
129,529,412 | 351,654 | 80,000,000 | 132,915 | 5,734 | 336,707 | (148,389 | ) | 678,621 | 1,008 | 679,629 | |||||||||||||||||||||||||||||
Net income for the year
|
- | - | - | - | - | 114,332 | - | 114,332 | 256 | 114,588 | ||||||||||||||||||||||||||||||
Other comprehensive income
|
- | - | - | - | - | - | (10,432 | ) | (10,432 | ) | 21 | (10,411 | ) | |||||||||||||||||||||||||||
Dividends to Arcos Dorados Holdings Inc.’s shareholders ($0.24 per share)
|
- | - | - | - | - | (50,036 | ) | - | (50,036 | ) | - | (50,036 | ) | |||||||||||||||||||||||||||
Stock-based compensation related to the 2011 Equity Incentive Plan
|
- | - | - | - | 12,900 | - | - | 12,900 | - | 12,900 | ||||||||||||||||||||||||||||||
Dividends on restricted share units under the 2011 Equity Incentive Plan
|
- | - | - | - | - | (242 | ) | - | (242 | ) | - | (242 | ) | |||||||||||||||||||||||||||
Dividends to non-controlling interests
|
- | - | - | - | - | - | - | - | (118 | ) | (118 | ) | ||||||||||||||||||||||||||||
Balances at December 31, 2012
|
129,529,412 | 351,654 | 80,000,000 | 132,915 | 18,634 | 400,761 | (158,821 | ) | 745,143 | 1,167 | 746,310 |
1.
|
Organization and nature of business
|
2.
|
Basis of presentation and principles of consolidation
|
3.
|
Summary of significant accounting policies
|
3.
|
Summary of significant accounting policies (continued)
|
3.
|
Summary of significant accounting policies (continued)
|
3.
|
Summary of significant accounting policies (continued)
|
3.
|
Summary of significant accounting policies (continued)
|
3.
|
Summary of significant accounting policies (continued)
|
4.
|
Acquisition of businesses
|
|
i.
|
The right to own and operate, directly or indirectly, franchised restaurants in each territory;
|
|
ii.
|
The right and license to grant sub franchises in each territory;
|
|
iii.
|
The right to adopt and use, and to grant the right and license to sub franchisees to adopt and use, the system in each territory;
|
|
iv.
|
The right to advertise to the public that it is a franchisee of McDonald’s;
|
|
v.
|
The right and license to grant sub franchises and sublicenses of each of the foregoing rights and licenses to each MF subsidiary.
|
Purchases of restaurant businesses:
|
2012
|
2011
|
2010
|
|||||||||
Property and equipment
|
$ | 1,793 | $ | 1,704 | $ | 2,016 | ||||||
Identifiable intangible assets
|
6,061 | - | 183 | |||||||||
Goodwill
|
1,196 | 4,952 | 1,276 | |||||||||
Gain on bargain purchase of franchised restaurants
|
(1,161 | ) | - | - | ||||||||
Purchase price
|
7,889 | 6,656 | 3,475 | |||||||||
Settlement of franchise receivables
|
(1,885 | ) | (663 | ) | (548 | ) | ||||||
Seller financing
|
- | - | (2,423 | ) | ||||||||
Purchase price paid
|
$ | 6,004 | $ | 5,993 | $ | 504 |
5.
|
Accounts and notes receivable, net
|
2012
|
2011
|
|||||||
Debit and credit card receivables
|
$45,223 | $42,344 | ||||||
Receivables from franchisees
|
38,079 | 33,823 | ||||||
Meal voucher receivables
|
16,800 | 13,737 | ||||||
Notes receivable
|
8,939 | 10,348 | ||||||
Allowance for doubtful accounts
|
(4,022 | ) | (6,390 | ) | ||||
$105,019 | $93,862 |
6.
|
Prepaid expenses and other current assets
|
2012
|
2011
|
|||||||
Prepaid expenses and taxes
|
$ | 86,249 | $ | 129,554 | ||||
Promotion items
|
14,899 | 11,100 | ||||||
$ | 101,148 | $ | 140,654 |
7.
|
Property and equipment, net
|
2012
|
2011
|
|||||||||
Land | $ | 200,340 | $ | 189,801 | ||||||
Buildings and leasehold improvements
|
712,908 | 599,350 | ||||||||
Equipment
|
544,213 | 438,601 | ||||||||
Total cost
|
1,457,461 | 1,227,752 | ||||||||
Total accumulated depreciation
|
(281,111 | ) | (204,572 | ) | ||||||
$ | 1,176,350 | $ | 1,023,180 |
8.
|
Net intangible assets and goodwill
|
2012
|
2011
|
|||||||
Net intangible assets (i)
|
||||||||
Computer software cost
|
$ | 62,159 | $ | 52,555 | ||||
Initial franchise fees
|
20,429 | 15,342 | ||||||
Reacquired franchised rights
|
6,076 | - | ||||||
Letter of credit fees
|
940 | 940 | ||||||
Total cost
|
89,604 | 68,837 | ||||||
Total accumulated amortization
|
(40,512 | ) | (28,172 | ) | ||||
Subtotal
|
49,092 | 40,665 | ||||||
Goodwill (ii)
|
||||||||
Mexico
Martinique (i)
|
7,780 | 7,180 | ||||||
Brazil
|
8,086 | 8,892 | ||||||
Ecuador
|
273 | 273 | ||||||
Peru
|
220 | 208 | ||||||
Chile
|
1,553 | 1,201 | ||||||
Colombia
|
267 | - | ||||||
Subtotal
|
18,179 | 17,754 | ||||||
$ | 67,271 | $ | 58,419 |
|
9.
|
Accrued payroll and other liabilities
|
2012
|
2011
|
|||||||
Current:
|
||||||||
Accrued payroll
|
$ | 110,499 | $ | 100,254 | ||||
Long-term incentive plan
|
8,843 | 20,490 | ||||||
Accrued expenses
|
17,908 | 20,029 | ||||||
Amnesty program
|
10,236 | 2,480 | ||||||
Other liabilities
|
3,204 | 3,468 | ||||||
$ | 150,690 | $ | 146,721 | |||||
Non-current:
|
||||||||
Long-term incentive plan
|
$ | 2,968 | $ | 12,879 | ||||
Amnesty program
|
20,210 | 25,972 | ||||||
Other liabilities
|
16,937 | 13,214 | ||||||
$ | 40,115 | $ | 52,065 |
|
10.
|
Short-term debt
|
11.
|
Long-term debt
|
2012
|
2011
|
|||||||
2019 Notes
|
$ | 306,798 | $ | 306,532 | ||||
2016 Notes
|
331,859 | 214,248 | ||||||
Capital lease obligations
|
9,121 | 5,171 | ||||||
Other long-term borrowings
|
3,824 | 2,971 | ||||||
Total
|
651,602 | 528,922 | ||||||
Current portion of long-term debt
|
1,634 | 2,971 | ||||||
Long-term debt, excluding current portion
|
$ | 649,968 | $ | 525,951 |
11.
|
Long-term debt (continued)
|
|
Other required disclosures
|
Principal
|
Interest
|
Total
|
||||||||||
2013
|
$ | 1,633 | $ | 57,918 | $ | 59,551 | ||||||
2014
|
3,167 | 57,722 | 60,889 | |||||||||
2015
|
2,707 | 57,398 | 60,105 | |||||||||
2016
|
329,960 | 57,219 | 387,179 | |||||||||
2017
|
443 | 23,447 | 23,890 | |||||||||
Thereafter
|
312,645 | 48,850 | 361,495 | |||||||||
Total payments
|
650,555 | 302,554 | 953,109 | |||||||||
Interest
|
- | (302,554 | ) | (302,554 | ) | |||||||
Discount on 2019 Notes
|
(1,802 | ) | - | (1,802 | ) | |||||||
Premium on 2016 Notes
|
2,849 | - | 2,849 | |||||||||
Long-term debt
|
$ | 651,602 | $ | - | $ | 651,602 |
12.
|
Derivative instruments
|
12.
|
Derivative instruments (continued)
|
12.
|
Derivative instruments (continued)
|
12.
|
Derivative instruments (continued)
|
Asset (Liability) Derivatives
|
||||||||
Fair Value
|
||||||||
Type of Derivative
|
Balance Sheets Location
|
2012
|
2011
|
|||||
Derivatives designated as hedging instruments under ASC Topic 815 Derivatives and Hedging
|
||||||||
Forward contracts
|
Accrued payroll and other liabilities
|
$
|
-
|
$
|
(48)
|
|||
Cross-currency interest rate swap (i)
|
Derivative instruments
|
(3,666)
|
-
|
|||||
(3,666)
|
(48)
|
|||||||
Derivatives not designated as hedging instruments under ASC Topic 815 Derivatives and Hedging
|
||||||||
Bond swaps
|
Derivative instruments
|
$
|
-
|
$
|
(2,583)
|
|||
Total equity return swap (ii)
|
Derivative instruments
|
(3,952)
|
-
|
|||||
(3,952)
|
(2,583)
|
|||||||
Total derivative instruments
|
$
|
(7,618)
|
$
|
(2,631)
|
|
(i)
|
Disclosed in the consolidated balance sheet as follows: $1,731 as a current asset and $5,397 as a non-current liability.
|
|
(ii)
|
Disclosed in the consolidated balance sheet as a current liability.
|
Derivatives in Cash Flow
Hedging Relationships
|
Gain (Loss) Recognized in Accumulated OCI on Derivative (Effective Portion)
|
(Gain) Loss Reclassified from Accumulated OCI into Income (Effective Portion)(i)
|
Gain (Loss) Recognized in Income on Derivative (Amount Excluded from Effectiveness Testing and Ineffective Portion)
|
||||||
Forward contracts
|
$
|
(901)
|
$
|
949
|
$
|
-
|
|||
Cross-currency interest rate swap
|
(3,294)
|
2,152
|
-
|
||||||
Total
|
$
|
(4,195)
|
$
|
3,101
|
$
|
-
|
|
(i)
|
The loss recognized in income related to forward contracts was recorded as an adjustment to food and paper. The net loss recognized in income related to the cross-currency interest rate swap is disclosed in the consolidated income statement as follows: a loss of $3,314 as an adjustment to foreign exchange results and a gain of $1,162 as an adjustment to net interest expense.
|
12.
|
Derivative instruments (continued)
|
Derivatives Not Designated as Hedging Instruments
|
Gain (Loss) Recognized in Income on Derivative instruments
|
|||
Bond swaps (i)
|
$ | (1,738 | ) | |
Total equity return swap (ii)
|
(4,270 | ) | ||
Others (i)
|
847 | |||
Total
|
$ | (5,161 | ) |
(i)
|
These results are recorded within “Loss from derivative instruments” in the Company’s consolidated statement of income.
|
(ii)
|
A $4,111 loss is recorded within “General and administrative expenses” and a $159 loss within “Net interest expense” in the Company’s consolidated statement of income.
|
Derivatives in Cash Flow
Hedging Relationships
|
Gain (Loss) Recognized in Accumulated OCI on Derivative (Effective Portion)
|
(Gain) Loss Reclassified from Accumulated OCI into Income (Effective Portion)
|
Gain (Loss) Recognized in Income on Derivative (Amount Excluded from Effectiveness Testing and Ineffective Portion)
|
||||||
Forward contracts
|
$
|
131
|
$
|
451
|
$
|
-
|
|||
Total
|
$
|
131
|
$
|
451
|
$
|
-
|
Derivatives Not Designated as Hedging Instruments
|
Gain (Loss) Recognized in Income on Derivative instruments
|
|||
Cross-currency interest rate swaps and Mirror swap
|
$ | (9,732 | ) | |
Bond swaps
|
1,464 | |||
Forwards
|
(1,256 | ) | ||
Others
|
287 | |||
Total
|
$ | (9,237 | ) |
12.
|
Derivative instruments (continued)
|
Derivatives in Cash Flow
Hedging Relationships
|
Gain (Loss) Recognized in Accumulated OCI on Derivative (Effective Portion)
|
(Gain) Loss Reclassified from Accumulated OCI into Income (Effective Portion)
|
Gain (Loss) Recognized in Income on Derivative (Amount Excluded from Effectiveness Testing and Ineffective Portion)
|
||||||
Forward contracts
|
$
|
(1,134)
|
$
|
273
|
$
|
-
|
|||
Total
|
$
|
(1,134)
|
$
|
273
|
$
|
-
|
Derivatives Not Designated as Hedging Instruments
|
Gain (Loss) Recognized in Income on Derivative instruments
|
|||
Cross-currency interest rate swaps and Mirror swaps
|
$ | (22,878 | ) | |
Bond swaps
|
(9,608 | ) | ||
Forwards
|
(323 | ) | ||
Total
|
$ | (32,809 | ) |
13.
|
Operating lease agreements
|
13.
|
Operating lease agreements (continued)
|
Restaurants
|
Others
|
Total
|
||||||||||
2013
|
$ | 133,183 | $ | 7,297 | $ | 140,480 | ||||||
2014
|
125,358 | 6,613 | 131,971 | |||||||||
2015
|
116,120 | 6,174 | 122,294 | |||||||||
2016
|
106,024 | 5,636 | 111,660 | |||||||||
2017
|
95,574 | 5,583 | 101,157 | |||||||||
Thereafter
|
389,302 | 11,508 | 400,810 | |||||||||
Total minimum payments
|
$ | 965,561 | $ | 42,811 | $ | 1,008,372 |
2012
|
2011
|
2010
|
||||||||||
Company-operated restaurants (i)
|
$ | 140,014 | $ | 129,135 | $ | 100,986 | ||||||
Franchised restaurants (ii)
|
44,457 | 41,252 | 34,172 | |||||||||
Total rent expense
|
$ | 184,471 | $ | 170,387 | $ | 135,158 |
(i)
|
Included within the caption “Occupancy and other operating expenses” in the consolidated statements of income.
|
(ii)
|
Included within the caption “Franchised restaurants – occupancy expenses” in the consolidated statements of income.
|
2012
|
2011
|
2010
|
||||||||||
Minimum rentals
|
$ | 117,006 | $ | 121,533 | $ | 98,307 | ||||||
Contingent rentals based on sales
|
67,465 | 48,854 | 36,851 | |||||||||
Total rent expense
|
$ | 184,471 | $ | 170,387 | $ | 135,158 |
14.
|
Franchise arrangements
|
14.
|
Franchise arrangements (continued)
|
2012
|
2011
|
2010
|
||||||||||
Rent
|
$ | 161,591 | $ | 152,380 | $ | 122,448 | ||||||
Initial fees (i)
|
780 | 514 | 660 | |||||||||
Royalty fees (ii)
|
652 | 627 | 544 | |||||||||
Total
|
$ | 163,023 | $ | 153,521 | $ | 123,652 |
(i)
|
Disclosed net of initial fees paid to McDonald’s Corporation for $882, $518 and $595 in 2012, 2011 and 2010, respectively.
|
(ii)
|
Disclosed net of royalties fees paid to McDonald’s Corporation for $65,756, $60,261 and $49,562 in 2012, 2011 and 2010, respectively.
|
Owned sites
|
Leased sites
|
Total
|
||||||||||
2013
|
$ | 9,799 | $ | 27,863 | $ | 37,662 | ||||||
2014
|
9,261 | 25,667 | 34,928 | |||||||||
2015
|
8,853 | 24,674 | 33,527 | |||||||||
2016
|
8,631 | 23,319 | 31,950 | |||||||||
2017
|
8,248 | 21,247 | 29,495 | |||||||||
Thereafter
|
45,955 | 106,543 | 152,498 | |||||||||
Total
|
$ | 90,747 | $ | 229,313 | $ | 320,060 |
15.
|
Income taxes
|
2012
|
2011
|
2010
|
|||
Puerto Rico
|
20%
|
30%
|
39%
|
||
Argentina, Martinique, French Guyana, Guadeloupe, St
Croix, St. Thomas, Aruba and Curacao
|
35%
|
35%
|
35%
|
||
Brazil and Venezuela
|
34%
|
34%
|
34%
|
||
Colombia
|
33%
|
33%
|
33%
|
||
Costa Rica, Peru and Mexico
|
30%
|
30%
|
30%
|
||
Panamá
|
25%
|
25%
|
27.5%
|
||
Uruguay and Trinidad and Tobago
|
25%
|
25%
|
25%
|
||
Ecuador
|
23%
|
24%
|
25%
|
||
Chile
|
20%
|
20%
|
17%
|
15.
|
Income taxes (continued)
|
|
2012
|
2011
|
2010
|
|||||||||
Current income tax expense
|
$ | 32,147 | $ | 47,485 | $ | 64,551 | ||||||
Deferred income tax expense (benefit)
|
14,228 | (2,882 | ) | (61,101 | ) | |||||||
Income tax expense
|
$ | 46,375 | $ | 44,603 | $ | 3,450 |
2012
|
2011
|
2010
|
||||||||||
Pre-tax income
|
$ | 160,963 | $ | 160,403 | $ | 109,742 | ||||||
Weighted-average statutory income tax rate (i)
|
35.20 | % | 32.35 | % | 36.87 | % | ||||||
Income tax expense at weighted-average statutory tax rate on pre-tax income
|
56,659 | 51,890 | 40,462 | |||||||||
Permanent differences
:
|
||||||||||||
Change in valuation allowance
|
(7,660 | ) | (20,962 | ) | (91,416 | ) | ||||||
Non-deductible expenses
|
22,258 | 28,783 | 31,575 | |||||||||
Tax deductible goodwill in Brazil (ii)
|
(18,789 | ) | (21,640 | ) | - | |||||||
Withholding income taxes on intercompany transactions
|
3,437 | 9,038 | 8,233 | |||||||||
Loss on amnesty program
|
- | - | 8,681 | |||||||||
Tax inflation adjustment
|
(10,983 | ) | (3,471 | ) | (3,994 | ) | ||||||
Expiration of tax loss carryforwards
|
1,017 | 1,298 | 6,071 | |||||||||
Others
|
436 | (333 | ) | 3,838 | ||||||||
Income tax expense
|
$ | 46,375 | $ | 44,603 | $ | 3,450 |
(i)
|
Weighted-average statutory income tax rate is calculated based on the lump-sum of the income before taxes by country multiplied by the prevailing statutory income tax rate, divided by the consolidated income before taxes.
|
(ii)
|
In November 2010, the Company completed the corporate reorganization of its companies in Brazil that was commenced on December 29, 2008. Among other corporate synergies, the reorganization resulted in contribution of the shares of the Brazilian operating entities to a new holding company and generated a tax deductible goodwill amounting to $310 million. The goodwill is deductible in Brazil for income tax purposes through its amortization in a period of 60 months starting in December 2010 following the merger of the Brazilian entities. The Company did not recognize any deferred tax asset for this benefit following the exemption in ASC 740-10-25-3.e. applicable to intercompany transfers. Therefore, the tax benefit is being recognized when realized on the tax return and applied to reduce income tax expenses.
|
|
2012
|
2011
|
||||||
Tax loss carryforwards (i)
|
$ | 267,826 | $ | 273,344 | ||||
Purchase price allocation adjustment
|
92,715 | 105,457 | ||||||
Property and equipment – tax inflation adjustment
|
39,290 | 31,749 | ||||||
Other accrued payroll and other liabilities
|
15,452 | 30,551 | ||||||
Share-based compensation programs
|
9,679 | 12,450 | ||||||
Provision for contingencies
|
9,447 | 11,905 | ||||||
Other deferred tax assets
|
20,185 | 18,015 | ||||||
Property and equipment – difference in depreciation rates
|
(54,383 | ) | (61,411 | ) | ||||
Other deferred tax liabilities (ii)
|
(16,769 | ) | (23,374 | ) | ||||
Valuation allowance (iii)
|
(236,563 | ) | (223,775 | ) | ||||
Net deferred tax asset
|
$ | 146,879 | $ | 174,911 |
15.
|
Income taxes (continued)
|
2012
|
||||
Fiscal year 2013
|
$ | 10,241 | ||
Fiscal year 2014
|
2,712 | |||
Fiscal year 2015
|
4,458 | |||
Fiscal year 2016
|
1,768 | |||
Fiscal year 2017
|
51,397 | |||
Thereafter
|
333,639 | |||
Without expiration terms
|
555,588 | |||
$ | 959,803 |
(ii)
|
Primarily related to intangible assets and foreign currency exchange gains.
|
(iii)
|
In assessing the realizability of deferred income tax assets, the Company considers whether it is more likely than not that some portion or all of the deferred income tax assets will not be realized.
|
2012
|
2011
|
|||||||
Current price (i)
|
11.96 | 20.53 | ||||||
Weighted-average base value of outstanding units (ii)
|
6.22 | 5.82 | ||||||
Expected volatility (iii)
|
37.3 | % | 38.0 | % | ||||
Dividend yield
|
2.0 | % | 1.2 | % | ||||
Risk-free interest rate
|
0.4 | % | 0.8 | % | ||||
Expected term
|
last vesting date
|
last vesting date
|
||||||
(i)
|
Equal to the quoted market price per share at the end of the year.
|
(ii)
|
As adjusted as a result of the stock split discussed in Note 22.
|
(iii)
|
Based on implied volatility of the Company’s class A shares.
|
Units
|
Weighted-average base value
|
Weighted-average fair value
|
||||||||||
Outstanding at December 31, 2009
|
2,375,958 | 5.39 | ||||||||||
Granted
|
1,368,018 | 5.88 | ||||||||||
Exercised (i)
|
(27,214 | ) | 4.27 | |||||||||
Forfeited
|
(182,348 | ) | 6.29 | |||||||||
Outstanding at December 31, 2010
|
3,534,414 | 5.54 | 10.94 | |||||||||
Exercised (ii)
|
(525,017 | ) | 5.19 | |||||||||
Forfeited
|
(85,815 | ) | 5.02 | |||||||||
Outstanding at December 31, 2011
|
2,923,582 | 5.82 | 14.44 | |||||||||
Exercised (iii)
|
(696,067 | ) | 4.61 | |||||||||
Forfeited
|
(98,294 | ) | 5.62 | |||||||||
Outstanding at December 31, 2012
|
2,129,221 | 6.22 | 5.79 | |||||||||
Exercisable at December 31, 2012
|
900,608 | 6.53 | 5.52 |
|
(iii)
|
The total amount paid for these exercises was $5,811. At December 31, 2012 the Company maintains a current payable of $907 related to these exercises that is disclosed within “accrued payroll and other liabilities” in the Company’s balance sheet.
|
Vested (i)
|
Non-vested (ii)
|
Total
|
||||||||||
Number of units outstanding (iii)
|
900,608 | 1,228,613 | 2,129,221 | |||||||||
Weighted-average fair market value per unit
|
5.52 | 5.99 | 5.79 | |||||||||
Total fair value of the plan
|
4,973 | 7,356 | 12,329 | |||||||||
Weighted-average accumulated percentage of service
|
100.00 | 80.62 | 88.44 | |||||||||
Accrued liability (iv)
|
4,973 | 5,931 | 10,904 | |||||||||
Compensation expense not yet recognized (v)
|
- | 1,425 | 1,425 |
17.
|
Commitments and contingencies
|
|
(i)
|
to pay monthly royalties commencing at a rate of approximately 5% of gross sales of the restaurants, substantially consistent with market;
|
|
(ii)
|
to agree with McDonald’s on a restaurant opening plan and a reinvestment plan for each three-year period and pay an initial franchise fee for each new restaurant opened; for the three-year period commenced on January 1, 2011 the Company must reinvest an aggregate of at least $60 million per year; and open no less than 250 new restaurants;
|
(iii)
|
to commit to funding a specified Strategic Marketing Plan; and
|
(iv)
|
to own (or lease) directly or indirectly, the fee simple interest in all real property on which any franchised restaurant is located.
|
17.
|
Commitments and contingencies (continued)
|
2012
|
2011
|
|||||||
Tax contingencies in Brazil (i)
|
$ | 4,011 | $ | 42,011 | ||||
Labor contingencies in Brazil (ii)
|
14,256 | 19,646 | ||||||
Other (iii)
|
9,551 | 10,231 | ||||||
Subtotal
|
27,818 | 71,888 | ||||||
Judicial deposits (iv)
|
(7,219 | ) | (6,852 | ) | ||||
Provision for contingencies
|
$ | 20,599 | $ | 65,036 |
17.
|
Commitments and contingencies (continued)
|
Quoted Prices in
|
||||||||||||||||
Active Markets
|
Significant Other
|
Significant
|
Balance as of
|
|||||||||||||
For Identical Assets
|
Observable Inputs
|
Unobservable Inputs
|
December 31,
|
|||||||||||||
(Level 1)
|
(Level 2)
|
(Level 3)
|
2012
|
|||||||||||||
Assets
|
||||||||||||||||
Cash equivalents
|
$ | 80,396 | $ | - | $ | - | $ | 80,396 | ||||||||
Cross-currency interest rate swap
|
- | 1,731 | - | 1,731 | ||||||||||||
Total Assets
|
$ | 80,396 | 1,731 | - | $ | 82,127 | ||||||||||
Liabilities
|
||||||||||||||||
Cross-currency interest rate swap
|
$ | - | $ | 5,397 | $ | - | $ | 5,397 | ||||||||
Total equity return swap
|
- | 3,952 | - | 3,952 | ||||||||||||
Long-term incentive plan
|
- | 11,811 | - | 11,811 | ||||||||||||
Total Liabilities
|
$ | - | 21,160 | - | $ | 21,160 |
Adjusted EBITDA:
|
||||||||||||
Brazil
|
$ | 240,954 | $ | 289,462 | $ | 250,606 | ||||||
Caribbean division
|
12,345 | 9,493 | 23,556 | |||||||||
NOLAD
|
26,738 | 19,551 | 15,400 | |||||||||
SLAD
|
150,520 | 121,475 | 83,998 | |||||||||
Total reportable segments
|
430,557 | 439,981 | 373,560 | |||||||||
Corporate and others (i)
|
(89,996 | ) | (100,193 | ) | (74,446 | ) | ||||||
Total adjusted EBITDA
|
$ | 340,561 | $ | 339,788 | $ | 299,114 |
For the fiscal year ended December 31,
|
||||||||||||
2012
|
2011
|
2010
|
||||||||||
Adjusted EBITDA reconciliation:
|
||||||||||||
Total Adjusted EBITDA
|
$ | 340,561 | $ | 339,788 | $ | 299,114 | ||||||
(Less) Plus items excluded from computation that affect operating income:
|
||||||||||||
Depreciation and amortization
|
(92,328 | ) | (68,971 | ) | (60,585 | ) | ||||||
Compensation expense related to the award right granted to our CEO
|
- | (2,214 | ) | (16,392 | ) | |||||||
Gains from sale of property and equipment
|
3,328 | 7,123 | 5,299 | |||||||||
Write-offs of property and equipment
|
(4,259 | ) | (3,570 | ) | (2,635 | ) | ||||||
Impairment of long-lived assets
|
(1,982 | ) | (1,715 | ) | (4,668 | ) | ||||||
Impairment of goodwill
|
(683 | ) | (2,077 | ) | - | |||||||
Incremental compensation expense related to ADBV long-term incentive plan
|
- | (10,526 | ) | (15,576 | ) | |||||||
Stock-based compensation related to the special awards in connection with the initial public offering under the 2011 Plan
|
(7,997 | ) | (5,703 | ) | - | |||||||
Cash bonus related to the initial public offering
|
- | (1,382 | ) | - | ||||||||
Operating income
|
236,640 | 250,753 | 204,557 | |||||||||
(Less) Plus:
|
||||||||||||
Net interest expense
|
(54,247 | ) | (60,749 | ) | (41,613 | ) | ||||||
Loss from derivative instruments
|
(891 | ) | (9,237 | ) | (32,809 | ) | ||||||
Foreign currency exchange results
|
(18,420 | ) | (23,926 | ) | 3,237 | |||||||
Other non-operating (expenses) income, net
|
(2,119 | ) | 3,562 | (23,630 | ) | |||||||
Income tax expense
|
(46,375 | ) | (44,603 | ) | (3,450 | ) | ||||||
Net income attributable to non-controlling interests
|
(256 | ) | (271 | ) | (271 | ) | ||||||
Net income attributable to Arcos Dorados Holdings Inc.
|
$ | 114,332 | $ | 115,529 | $ | 106,021 | ||||||
For the fiscal year ended December 31,
|
||||||||||||
2012
|
2011
|
2010
|
||||||||||
Depreciation and amortization:
|
||||||||||||
Brazil
|
$ | 47,659 | $ | 44,503 | $ | 43,927 | ||||||
Caribbean division
|
14,044 | 11,982 | 11,733 | |||||||||
NOLAD
|
26,628 | 25,670 | 23,197 | |||||||||
SLAD
|
30,987 | 24,070 | 20,343 | |||||||||
Total reportable segments
|
119,318 | 106,225 | 99,200 | |||||||||
Corporate and others (i)
|
7,279 | 6,536 | 6,048 | |||||||||
Purchase price allocation (ii)
|
(34,269 | ) | (43,790 | ) | (44,663 | ) | ||||||
Total depreciation and amortization
|
$ | 92,328 | $ | 68,971 | $ | 60,585 |
|
As of December 31,
|
|||||||
2012
|
2011 | |||||||
Total assets:
|
||||||||
Brazil
|
$ | 921,003 | $ | 992,832 | ||||
Caribbean division
|
264,527 | 259,633 | ||||||
NOLAD
|
419,545 | 381,840 | ||||||
SLAD
|
667,366 | 513,909 | ||||||
Total reportable segments
|
2,272,441 | 2,148,214 | ||||||
Corporate and others (i)
|
109,636 | 98,451 | ||||||
Purchase price allocation (ii)
|
(332,914 | ) | (371,259 | ) | ||||
Total assets
|
$ | 2,049,163 | $ | 1,875,406 |
Foreign currency translation
|
Unrealized results on cash flow hedges
|
Unrecognized prior service cost of post-employment benefits
|
Total Accumulated other comprehensive income (loss) | |||||||||||||
Balance at December 31, 2009
|
(128,021 | ) | 232 | - | (127,789 | ) | ||||||||||
Current - period other comprehensive income
|
29,986 | (861 | ) | - | 29,125 | |||||||||||
Balance at December 31, 2010
|
(98,035 | ) | (629 | ) | - | (98,664 | ) | |||||||||
Current - period other comprehensive income
|
(50,307 | ) | 582 | - | (49,725 | ) | ||||||||||
Balance at December 31, 2011
|
(148,342 | ) | (47 | ) | - | (148,389 | ) | |||||||||
Current - period other comprehensive income
|
(8,125 | ) | (1,094 | ) | (1,213 | ) | (10,432 | ) | ||||||||
Balance at December 31, 2012
|
(156,467 | ) | (1,141 | ) | (1,213 | ) | (158,821 | ) |
2011
|
||||
Cash and cash equivalents
|
$ | 35,425 | ||
Other receivables
|
33,506 | |||
Inventories
|
27,686 | |||
Prepaid expenses and other current assets
|
3,211 | |||
Property and equipment, net
|
10,190 | |||
Deferred income taxes
|
4,225 | |||
Accounts payable
|
(53,868 | ) | ||
Income taxes payable
|
(1,181 | ) | ||
Other taxes payable
|
(2,148 | ) | ||
Accrued payroll and other liabilities
|
(8,479 | ) | ||
Intercompany payable
|
(3,309 | ) | ||
Net book value
|
$ | 45,258 |
For the fiscal year ended December 31,
|
||||||||||||
2012
|
2011
|
2010
|
||||||||||
Net income attributable to Arcos Dorados Holdings Inc. available to common shareholders
|
$ | 114,332 | $ | 115,529 | $ | 106,021 | ||||||
Weighted-average number of common shares outstanding - Basic
|
209,529,412 | 215,420,271 | 241,882,966 | |||||||||
Incremental shares from assumed exercise of stock options (a)
|
- | - | - | |||||||||
Incremental shares from vesting of restricted stock units
|
248,646 | 126,184 | - | |||||||||
Weighted-average number of common shares outstanding - Diluted
|
209,778,058 | 215,546,455 | 241,882,966 | |||||||||
Basic net income per common share attributable to Arcos Dorados Holdings Inc.
|
$ | 0.55 | $ | 0.54 | $ | 0.44 | ||||||
Diluted net income per common share attributable to Arcos Dorados Holdings Inc.
|
$ | 0.55 | $ | 0.54 | $ | 0.44 |
As of December 31, | ||||||||
2012
|
2011
|
|||||||
Inventories
|
$ | - | $ | 1,436 | ||||
Prepaid expenses and other current assets
|
- | 7,150 | ||||||
Accounts and notes receivables
|
1,999 | 2,497 | ||||||
Other receivables
|
73,664 | 5,538 | ||||||
Miscellaneous
|
7,081 | - | ||||||
Accounts payable
|
5,514 | 15,311 |
Fiscal years ended December 31,
|
||||||||
2012
|
2011(i)
|
|||||||
Food and paper (ii)
|
$
|
321,413
|
$ |
320,020
|
||||
Occupancy and other operating expenses
|
9,795
|
10,970
|
||||||
Other operating income
|
1,480
|
-
|
||||||
(i)
|
Includes nine months of operations as a result of the Split-off described in Note 23.
|
(ii)
|
Includes $41,853 of logistics service fees and $279,560 of suppliers purchases managed through Axis for fiscal year ended December 31, 2012; and $26,628 and $293,392, respectively, for fiscal year ended December 31, 2011.
|
Description
|
Balance at beginning of period
|
Additions (i)
|
Deductions (ii)
|
Translation
|
Balance at end of period
|
|||||||||||||||
Year ended December 31, 2012:
|
||||||||||||||||||||
Deducted from assets accounts:
|
||||||||||||||||||||
Allowance for doubtful accounts
|
$ | 6,390 | $ | 2,065 | $ | (4,682 | ) | $ | 250 | $ | 4,023 | |||||||||
Valuation allowance on deferred tax assets
|
223,775 | - | (3,378 | ) | 16,166 | 236,563 | ||||||||||||||
Reported as liabilities:
|
||||||||||||||||||||
Provision for contingencies
|
65,036 | 16,355 | (57,011 | ) | (3,781 | ) | 20,599 | |||||||||||||
Total
|
$ | 295,201 | $ | 18,420 | $ | (65,071 | ) | $ | 12,635 | $ | 261,185 | |||||||||
Year ended December 31, 2011:
|
||||||||||||||||||||
Deducted from assets accounts:
|
||||||||||||||||||||
Allowance for doubtful accounts
|
$ | 4,794 | $ | 1,931 | $ | (52 | ) | $ | (283 | ) | $ | 6,390 | ||||||||
Valuation allowance on deferred tax assets
|
220,182 | - | (20,962 | ) | 24,555 | 223,775 | ||||||||||||||
Reported as liabilities:
|
||||||||||||||||||||
Provision for contingencies
|
64,347 | 53,869 | (48,607 | ) | (4,573 | ) | 65,036 | |||||||||||||
Total
|
$ | 289,323 | $ | 55,800 | $ | (69,621 | ) | $ | 19,699 | $ | 295,201 |
Year ended December 31, 2010:
|
||||||||||||||||||||
Deducted from assets accounts:
|
||||||||||||||||||||
Allowance for doubtful accounts
|
$ | 6,125 | $ | 937 | $ | (2,636 | ) | $ | 368 | $ | 4,794 | |||||||||
Valuation allowance on deferred tax assets
|
298,776 | - | (91,416 | ) | 12,822 | 220,182 | ||||||||||||||
Reported as liabilities:
|
||||||||||||||||||||
Provision for contingencies
|
86,931 | 67,074 | (89,487 | ) | (171 | ) | 64,347 | |||||||||||||
Total
|
$ | 391,832 | $ | 68,011 | $ | (183,539 | ) | $ | 13,019 | $ | 289,323 |
(i)
|
Additions in provision for contingencies are explained as follows:
|
(ii)
|
Deductions in valuation allowance in deferred tax assets are charged to income tax expenses.
|
To:
|
Arcos Dorados B.V.
Prins Bernhardplein 200 1097 JB
Amsterdam, Netherlands
|
From:
|
Goldman Sachs International
|
Re:
|
Amendment No. 3 to Share Swap Transaction
|
Ref. No:
|
SDB4174646513
|
Date:
|
April 4, 2013
|
Yours faithfully,
|
||
GOLDMAN SACHS INTERNATIONAL
|
||
By:
|
/s/ Charlotte Cobb | |
Authorized Signatory
|
Agreed and Accepted By:
|
||
ARCOS DORADOS B.V.
|
||
By:
|
/s/ Diego Pace | |
Name: Diego Pace
|
||
Title: Attorney-in-Fact
|
||
ARCOS DORADOS HOLDINGS INC.
|
||
By:
|
/s/ Diego Pace | |
Name: Diego Pace
|
||
Title: Attorney-in-Fact
|
1.
|
Interpretation
|
2.
|
Obligations
|
3.
|
Representations
|
4.
|
Agreements
|
5.
|
Events of Default and Termination Events
|
6.
|
Early Termination
|
7.
|
Transfer
|
8.
|
Contractual Currency
|
9.
|
Miscellaneous
|
10.
|
Offices; Multibranch Parties
|
11.
|
Expenses
|
12.
|
Notices
|
14.
|
Definitions
|
BANK OF AMERICA, N.A.
|
ARCOS DORADOS HOLDINGS INC.
|
|||
By:
|
/s/ Carl R. Kolbet
|
By:
|
/s/ Miguel Sanchez de Bustamante
|
|
Name: Carl R. Kolbet
|
Name: Miguel Sanchez de Bustamante
|
|||
Title: Director
|
Title: DR. SR. Corporate Finance
|
Part 1.
|
Termination Provisions.
|
(a)
|
“
Specified Entity
” means in relation to Party A for the purpose of:
|
(b)
|
“
Specified Transaction
” will have the meaning specified in Section 14.
|
(c)
|
The “
Cross Default
” provisions of Section 5(a)(vi) will apply to Party A and Party B, subject to the following amendments:
|
|
i.
|
deleting in the seventh line thereof the words “, or becoming capable at such time of being declared,” and
|
|
ii.
|
adding at the end thereof: “provided that, notwithstanding the foregoing, it shall not be an Event of Default under (2) above with respect to a party (“X”) if (A) the failure to pay referred in (2) was caused by an error or omission of an administrative or operational nature made by or on behalf of X by any bank, broker-dealer, clearing corporation or other similar financial intermediary holding funds, securities or other property directly or indirectly for account of X; (B) funds were available to enable X to make the relevant payment when due; and (C) such payment or delivery is made within three Local Business Days of X’s receipt of written notice of its failure to pay.”
|
(d)
|
The “
Bankruptcy
” provisions of Section 5(a)(vii) will apply to Party A and will apply to Party B;
provided
that such provisions shall be amended by deleting “30” and substituting “60” in clauses (4)(B) and (7) thereof.
|
(e)
|
The “
Credit Event Upon Merger
’’ provisions of Section 5(b)(v) will apply to Party A and will not apply to Party B.
|
(f)
|
The “
Automatic Early Termination
” provision of Section 6(a)(iv) will not apply to Party A or to Party B;
provided, however
, that with respect to a party, where the Event of Default specified in Section 5(a)(vii)(1), (3), (4), (5), (6) or, to the extent analogous thereto, (8) is governed by a system of law which does not permit termination to take place after the occurrence of the relevant Event of Default, then the Automatic Early Termination provisions of Section 6(a) will apply.
|
(g)
|
Payments on Early Termination
. For the purpose of Section 6(e), Market Quotation and the Second Method will apply.
|
(h)
|
“
Termination Currency
”·means United States Dollars.
|
(i)
|
Additional Termination Event
. Not Applicable.
|
Part 2.
|
Tax Representations
.
|
(a)
|
Payer Tax Representations
. For the purpose of Section 3(e), Party A and Party B will make the following representation:-
|
(b)
|
Party A Payee Representation
. For the purpose of Section 3(f) of this Agreement, Party A makes the following representation:
|
|
i.
|
It is a national banking association organized and existing under the laws of the United States of America, it is an exempt recipient under Treasury Regulation Section 1.6049-4(c)(1 )(ii)(M) and its federal taxpayer identification number is 94-1687665.
|
|
ii.
|
It is a “U.S. person” (as that term is used in section 1.1441-4(a)(3)(ii) of the United States Treasury Regulations) for United States federal income tax purposes.
|
(c)
|
Party B Payee Representation
. For the purpose of Section 3(f) of this Agreement, Party B makes the following representations:·
|
|
i.
|
It is treated as a corporation for U.S. federal income tax purposes.
|
|
ii.
|
It is a “foreign person” (as that term is used in section 1.6041-4(a)(4) of United States Treasury Regulations) for United States federal income tax purposes; and no portion of any payment received or to be received by it in connection with this Agreement will be effectively connected with the conduct of a trade or business in the United States.
|
Part 3.
|
Agreement to Deliver Documents
.
|
(a)
|
Tax forms, documents or certificates to be delivered are:
|
Party required to deliver document
|
Form/Document/Certificate
|
Date by which to be delivered
|
||
Party A
|
A complete and accurate U.S. Internal Revenue Service Form W-9 or any successor form.
|
(i) Upon becoming a party to this Agreement, (ii) thereafter promptly upon reasonable demand by the other party, and (iii) if such form or document was previously delivered and has become obsolete or incorrect, promptly upon learning that such form or document previously delivered by Party A has become obsolete or incorrect.
|
||
Party B
|
A complete and accurate U.S. Internal Revenue Service Form
W-8BEN or any successor form, signed in original.
|
(i) Upon becoming a party to this Agreement, (ii) before December 31 of each third succeeding calendar year, (iii) promptly upon reasonable demand by the other party, and (iv) if such Form was previously delivered and has become obsolete or incorrect, promptly upon learning that such Form previously delivered by Party B has become obsolete or incorrect.
|
||
(b)
|
Other documents to be delivered are:
|
Party required to deliver document
|
Form/Document/Certificate
|
Date by which to be delivered
|
Covered by Section 3(d)
Representation
|
|||
Party A and Party B
|
Either (i) a signature booklet containing a secretary's certificate and resolutions (“authorizing resolutions”) or (ii) other authority documentation, in either case, which (x) authorizes the party to enter into derivatives transactions of the type contemplated by the parties and (y) is reasonably satisfactory in form and substance to the other party
|
The earlier of (i) the fifth Local Business Day after the trade date of the first Transaction and (ii) upon execution of this Agreement and as deemed necessary for any further documentation.
|
Yes
|
|||
Party A and Party B
|
Copies of documents evidencing each party’s capacity to execute this Agreement, each Confirmation and any Credit
|
Upon the execution of this Agreement, and, with respect to a Confirmation, upon the other
|
Yes
|
Party required to deliver document
|
Form/Document/Certificate
|
Date by which to be delivered
|
Covered by Section 3(d)
Representation
|
|||
Support Document (if applicable) and to perform its obligations hereunder and thereunder. | party’s request. | |||||
Party A and Party B
|
A copy of the annual report of such party containing audited consolidated financial statements for each such fiscal year, certified by independent certified public accountants and prepared in accordance with generally accepted accounting principles in the country in which such party is organized.
|
As soon as practicable after the execution of this Agreement and also within 120 calendar days after the end of each fiscal year while there are any obligations outstanding under this Agreement. In the case of Bank of America Corporation, it shall be deemed to be delivered on the date such report is made available on
www.bankof america.com/investor/
.
|
Yes
|
|||
Party A and Party B
|
A duly executed copy of the Credit Support Documents specified in Part 4 of this Schedule.
|
As soon as practicable after the execution of this Agreement.
|
No
|
|||
Party B
|
Any other document required by law or regulation in order that Party A may comply with its know-your-customer and anti-money laundering obligations.
|
Promptly after request
|
Yes
|
|||
Party B
|
Certificate from the Process Agent for Party B that it consents to receipt of process on behalf of Party B.
|
Upon execution and delivery of this Agreement
|
No
|
Part 4.
|
Miscellaneous.
|
(a)
|
Addresses for Notices
. For the purpose of Section 12(a) of this Agreement:
|
Address:
|
Arcos Dorados Holdings Inc.
C/C Arcos Dorados Argentina S.A.
Roque Saenz Peña -432- Olivos- Buenos Aires
Argentina- B1636FFB
|
Attention:
|
Miguel Sanchez de Bustamante / Diego Pace
Julieta Nalband
|
Facsimile No.:
|
(54-11) 4711-2236
|
TelephoneNo.:
|
(54-11) 4711-2000
|
(b)
|
Process Agent
. For the purpose of Section 13(c) of this Agreement:
|
(c)
|
Offices
. The provisions of Section 10(a) will apply to this Agreement.
|
(d)
|
Multibranch Party
. For the purpose of Section 10(b) of this Agreement:
|
(e)
|
Calculation Agent
. The Calculation Agent is Party A unless (i) otherwise specified in a Confirmation in relation to the relevant Transaction or (ii) an Event of Default occurs and is continuing with respect to Party A, in which case Party B may appoint a Reference Market-maker to act as alternate Calculation Agent for so long as such Event of Default continues. Following any such designation of an alternate Calculation Agent, if no Event of Default in respect of Party A is then continuing, the Calculation Agent shall again be Party A.
|
(f)
|
Credit Support Document
. Details of any Credit Support Document:
|
(g)
|
Credit Support Provider
. Credit Support Provider means:
|
(h)
|
Local Business Day
. Notwithstanding anything to the contrary in the definition of Local Business Day in Section 14 of this Agreement, the parties hereby agree that for all purposes hereunder a Local Business Day shall occur only on a Business Day in both New York, New York and Buenos Aires, Argentina.
|
(i)
|
Governing Law
. This Agreement and all matters arising out of or in any way connected thereto will be governed by and construed in accordance with the laws of the State of New York (without reference to the choice of law doctrine).
|
(j)
|
Netting of Payments
. Section 2(c)(ii) of this Agreement will not apply to all Transactions, starting from the date of this Agreement.
|
(k)
|
Affiliate
. “Affiliate” has the meaning specified in Section 14.
|
(l)
|
Additional Representation
. For the purpose of Section 3 of this Agreement, each party will be deemed to represent to the other party on the date on which it enters into a Transaction that (absent a written agreement between the parties that expressly imposes affirmative obligations to the contrary for that Transaction):
|
|
i.
|
Non-Reliance
. It is acting for its own account, and it has made its own independent decisions to enter into that Transaction and as to whether that Transaction is appropriate or proper for it based upon its own judgment and upon advice from such advisers as it has deemed necessary. It is not relying on any communication (written or oral) of the other party as investment advice or as a recommendation to enter into that Transaction, it being understood that information and explanations related to the terms and conditions of a Transaction shall not be considered investment advice or a recommendation to enter into that Transaction. No communication (written or oral) received from the other party shall be deemed to be an assurance or guarantee as to the expected results of that Transaction.
|
|
ii.
|
Assessment and Understanding
. It is capable of assessing the merits of and understanding (on its own behalf or through independent professional advice), and understands and accepts, the terms, conditions and risks of that Transaction. It is also capable of assuming, and assumes, the risks of that Transaction.
|
|
iii.
|
Status of Parties
. The other party is not acting as a fiduciary for or an adviser to it in respect of that Transaction.
|
|
iv.
|
Eligible Contract Participant
. It is an “eligible contract participant” as defined in Section 1 of the U.S. Commodity Exchange Act, 7 U.S.C.”
|
(m)
|
Recording of Conversations
. Each party (i) consents to the recording of telephone conversations between the trading and marketing personnel of the parties in connection with this Agreement or any potential Transaction, and (ii) agrees, to the extent permitted by applicable law, that the recordings may be submitted in evidence in any proceedings.
|
(n)
|
Transfer
. Notwithstanding the provisions of Section 7, Party A may assign and delegate its rights and obligations under (i) any one or more Transactions or (ii) this Agreement and all Transactions hereunder (the “
Transferred Obligations
”) to any direct or indirect affiliate of Party A (the “
Assignee
”) by notice specifying the effective date of such transfer (“
Effective Date
”) and including an executed acceptance and assumption by the Assignee of the Transferred Obligations and provided further,(1) if the Assignee is a direct or indirect affiliate of Party A and it is not an entity rated by Moody’s, S&P or Fitch, Inc. (“Fitch”) or any successor to the business of any such rating agency, the Transferred Obligations will be guaranteed by a direct or indirect affiliate of Party A that has a credit rating by Moody’s, S&P or Fitch; (2) Party B will not, as a result of such transfer, be required to pay the Assignee any Indemnifiable Tax greater than the amount that Party B would have been required to pay to Party A in the absence of such transfer; (3) the Assignee will not, as a result of such transfer, be required to withhold or deduct on account of any Tax an amount in excess of that which Party A would have been required to so withhold or deduct in the absence of such transfer; (4) the transfer shall not give rise to a taxable event or any adverse tax consequences to Party B; (5) the transferee shall provide Party B with a complete and accurate U.S. Internal Revenue Service Form W-9 or W-8 (as applicable) prior to becoming a party to this Agreement; (6) the transferee shall provide Payer Tax Representations and Payee Tax Representations; (7) an Event of Default or a Termination Event does not occur as a result of such transfer; and (8) Party A has delivered (in accordance with the notice section of this Agreement) an executed assignment and assumption agreement by the Assignee and Party A of the transferred obligations.
|
Part 5
|
Other Provisions.
|
(a)
|
ISDA Definitions
. Reference is hereby made to the 2006 ISDA Definitions (the “
2006 Definitions
”) and the 1998 FX and Currency Option Definitions (the “
FX Definitions
”) (collectively the “
ISDA Definitions
”) each as published by the International Swaps and Derivatives Association, Inc., which are hereby incorporated by reference herein. Any terms used and not otherwise defined herein, which are contained in the 2006 Definitions shall have the meaning set forth therein. In the event of any inconsistency between the 2006 Definitions and the FX Definitions, the FX Definitions shall prevail with respect to an FX Transaction or a Currency Option Transaction. In the event of any inconsistency between the provisions of this Agreement and the 2006 Definitions, the provisions of this Agreement shall prevail. For the purpose of this Agreement, the expression “Swap Transaction” as used in the 2006 Definitions shall be read to mean “Transactions”.
|
(b)
|
WAIVER OF JURY TRIAL
. EACH PARTY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY PROCEEDINGS RELATING TO THIS AGREEMENT, ANY CREDIT SUPPORT DOCUMENT OR ANY TRANSACTION.
|
(c)
|
Illegality
. For the purpose of Section 5(b)(i), the obligation of a party to comply with any directive issued or given by any government agency or authority with competent jurisdiction which has the result referred to in Section 5(b)(i) will be deemed to be an “Illegality”.
|
(d)
|
Confirmation Procedures
. On or promptly following the Trade Date of a Transaction, Party A will send in writing to Party B a Confirmation. Party B agrees to respond to such Confirmation within three (3) Local Business Days after receipt of that Confirmation, either by confirming agreement thereto or requesting a correction of any error(s) contained therein. Failure by Party B to respond within such period shall not affect the validity or enforceability of such Transaction.
|
(e)
|
Scope of Agreement
. Notwithstanding anything contained in this Agreement to the contrary, any transaction which may otherwise constitute a “Specified Transaction” for the purposes of this Agreement which has been or will be entered into between the parties shall constitute a “Transaction” which is subject to, governed by and construed in accordance with the terms of this Agreement, unless the Confirmation with respect to a Transaction entered into after the execution of this Agreement expressly provides otherwise.
|
(f)
|
“
Set-off
” shall, for purposes of this Agreement and any Credit Support Document, have the meaning set forth in Section 14 and shall include without limitation the rights in Section 6(f). Section 6 of this Agreement is modified to include the following additional sub-clause (f):
|
(g)
|
Financial Statements
. Section 3(d) is hereby amended by adding in the third line thereof after the word “respect” and before the period: “or, in the case of financial statements, a fair presentation of the financial condition of the relevant party”.
|
(h)
|
Foreign Account Tax Compliance Act
. (a) For purposes of any Payer Tax Representation, the words “any Tax from any payment’’ shall not include any tax imposed under Sections 1471 and 1472 of the Internal Revenue Code of 1986, as amended (or the United States Treasury regulations or other guidance issued or any agreements entered into thereunder) (“FATCA Withholding Tax”) and (b) the definition of “Indemnifiable Tax” shall not include any FATCA Withholding Tax.
|
Part 6.
|
FX Transactions and Currency Option Transactions
|
(a)
|
Confirmations
. Any FX Transaction or Currency Option Transaction into which the parties may before the date of this Agreement have entered, or may in the future enter, where the relevant Confirmation on its face does not expressly exclude the application of this Agreement, shall (to the extent not otherwise provided for in this Agreement) be subject to, governed by and construed in accordance with this Agreement (in substitution for any existing terms, if any, whether express or implied). Each such FX Transaction and Currency Option Transaction shall be a Transaction, and the documents and other confirming evidence (including electronic messages on an electronic messaging service) exchanged between the parties confirming such FX Transaction or Currency Option Transaction shall each be a Confirmation (even where not so specified therein), for the purposes of this Agreement.
|
(b)
|
Payment Instructions
. All payments to be made in respect of FX Transactions and Currency Option Transactions shall be made in accordance with standing payment instructions provided by the parties (or as otherwise specified in a Confirmation).
|
(c)
|
Currency Option Transaction Discharge and Termination.
|
(d)
|
Netting of Premiums
. Unless otherwise agreed, if on any Premium Payment Date, Premiums would otherwise be payable hereunder in the same currency between the same Offices of the parties, then, on such date, each party’s obligation to make payment of any such Premium will be automatically satisfied and discharged and, each party shall aggregate the Premium(s) that would otherwise have been payable by it and only the difference between the aggregate Premium(s) shall be payable by the party owing the larger aggregate Premium(s) to the other party, and, if the aggregate Premium(s) are equal, no payment shall be made.
|
(e)
|
Amendments to the FX and Currency Option Definitions
. Section 3.4 of the FX and Currency Option Definitions is hereby amended by the addition of the following as new Sections 3.4(c) and (d) of the FX and Currency Option Definitions:
|
|
“(c)
|
Unless otherwise agreed in writing by the parties, the Premium related to a Currency Option Transaction shall be paid on its Premium Payment Date in immediately available funds.
|
|
(d)
|
If any Premium is not received on the Premium Payment Date, the Seller may elect: (i) to accept a late payment of such Premium; (ii) to give written notice of such non-payment and, if such payment shall not be received within three (3) Local Business Days of such notice, treat the related Currency Option Transaction as void; or (iii) to give written notice of such non-payment and, if such payment shall not be not received within three (3) Local Business Days, treat such non-payment as an Event of Default under Section 5(a)(i) of this Agreement. If the Seller elects to act under either clause (i) or (ii) of the preceding sentence, the Buyer shall pay all out-of-pocket costs and actual damages incurred in connection with such unpaid or late Premium or void Currency Option Transaction, including, without limitation, interest on such Premium from and including the Premium Payment Date to but excluding the date of actual payment in the same currency as such Premium at the Default Rate and any other losses, costs or expenses incurred by the Seller in connection with such terminated Currency Option Transaction, for the cost of its funding, or the loss incurred as a result of terminating, liquidating, obtaining or re-establishing a delta hedge or related trading position with respect to such Currency Option Transaction,”
|
BANK OF AMERICA, N.A.
|
ARCOS DORADOS HOLDINGS INC.
|
|||
By:
|
/s/ Carl R. Kolbet
|
By:
|
/s/ Miguel Sanchez de Bustamante
|
|
Name: Carl R. Kolbet
|
Name: Miguel Sanchez de Bustamante
|
|||
Title: Director
|
Title: DR. SR. Corporate Finance
|
By:
|
||
Name:
|
||
Title:
|
ARCOS DOURADOS COMERCIO DE ALIMENTOS LTDA.
|
||||
By:
|
/s/ Dorival Oliveira
|
/s/ Ivan Zarur
|
||
Name: Dorival Oliveira
|
Ivan Zarur
|
|||
Title: Diretor de Desenvolvimento
|
Diretor Financeiro
|
BANK OF AMERICA, N.A.
|
||
By:
|
/s/ Carl R. Kolbet
|
|
Name: Carl R. Kolbet
|
||
Title: Director
|
ARCOS DORADOS HOLDINGS INC.
|
||
By:
|
||
Name:
|
||
Title:
|
||
Witnessed:
|
By:
|
||
Name:
|
||
Title:
|
By:
|
||
Name:
|
||
Title:
|
ARCOS DOURADOS COMERCIO DE ALIMENTOS LTDA.
|
||
By:
|
||
Name:
|
||
Title:
|
BANK OF AMERICA, N.A.
|
||
By:
|
||
Name:
|
||
Title:
|
ARCOS DORADOS HOLDINGS INC.
|
||
By:
|
/s/ Miguel Sanchez de Bustamante
|
|
Name: Miguel Sanchez de Bustamante
|
||
Title: DR. SR. Corporate Finance
|
||
Witnessed:
|
By:
|
||
Name:
|
||
Title:
|
By:
|
||
Name:
|
||
Title:
|
To:
|
Arcos Dorados Holdings Inc.
|
|
Roque Saenz Pena 432
|
|
B1636FFB Olivos
|
|
Buenos Aires, Argentina
|
Attn:
|
Julieta Nalband
|
Tel:
|
+54 11 4711 2672
|
Email:
|
julieta.nalband@ar.mcd.com
|
From:
|
Bank of America, N.A.
|
|
200 No. College Street
|
|
Charlotte, NC 28255
|
|
United States
|
Dept:
|
Swaps Department
|
Tel:
|
(+1) 312 234 2732
|
Fax:
|
(+1) 866 255 1444
|
Date:
|
June 8, 2012
|
Our Ref No:
|
909697986
|
Internal Tracking No:
|
9697986
|
Admin No:
|
12BN67373
|
Trade Date:
|
April 20, 2012
|
Effective Date:
|
April 24, 2012
|
Termination Date:
|
July 13, 2016, subject to adjustment in accordance with the Following Business Day Convention.
|
Brazil Business Day:
|
A Business Day (as such term is defined in the Definitions) in Sao Paulo.
|
Business Days Applicable to Payment Dates:
|
New York.
|
Unless otherwise specified herein (“
Business Day
”) shall mean New York only.
|
Fixed Rate Payer 1:
|
Party A
|
Fixed Rate Payer I Reference Currency Notional Amount:
|
BRL 70,000,000.00
|
Fixed Rate Payer I Period End Date:
|
The 13th of each January and July in each year, commencing on July 13, 2012 and ending on the Termination Date. No Adjustment.
|
Fixed Rate Payer I Payment Date:
|
The 13th of each January and July in each year, commencing on July 13, 2012 and ending on the Termination Date; subject to adjustment in accordance with the Following Business Day Convention.
|
Fixed Rate:
|
10.2500 per cent
|
Fixed Rate Day Count Fraction:
|
30/360
|
Final Exchange:
|
Applicable
|
Final Exchange Date:
|
The Termination Date
|
Party A
Final Exchange Amount:
|
BRL 70,000,000.00
|
Party B
Final Exchange Amount:
|
USD 37,433,155.08
|
All payments to be paid in USD:
|
Notwithstanding any provision to the contrary set forth herein, each of the amounts payable under the Transaction by Party A on each Fixed Rate Payer I Payment Date and on the Final Exchange Date shall be converted from an amount denominated in BRL to an amount denominated in USD by application of the Settlement Rate Option determined in respect of the Valuation Date immediately preceding such Fixed Rate Payer I Payment Date or the Final Exchange Date, as applicable, and each USD denominated amount resulting from such conversion shall be paid on such Fixed Rate Payer I Payment Date or Final Exchange Date, as applicable, by Party A;
provided
,
however
, that such conversion and payment obligations shall be subject in all respects to (A) any applicable provisions of Article 5 in the 1998 Definitions with reference to the relevant terms set out below in this
Section D
and (B) any adjustment required to be made in accordance with the other provisions of this
Section D
to the occurrence of the Valuation Date, any Fixed Rate Payer I Payment Date or the Final Exchange Date, as applicable.
|
Settlement Rate Option:
|
BRL PTAX (BRL09)
|
Valuation Date:
|
In respect of Party A and any BRL denominated payment to be made by such party under the Transaction on a Fixed Rate Payer I Payment Date or the Final Exchange Date, as applicable, the date that is the 3rd consecutive Brazil and New York Business Day to occur prior to such Fixed Rate Payer I Payment Date or Final Exchange Date, as applicable, as such Fixed Rate Payer I Payment Date or Final Exchange Date is adjusted in accordance with the Following Business Day Convention;
provided
,
however
, in the event of an Unscheduled Holiday, subject to adjustment in accordance with the Following Business Day Convention and the applicable provisions of Article 5 in the 1998 Definitions and with reference to the provisions set out below in this
Section D
.
|
Notwithstanding the foregoing, if a Valuation Date falls on a date that, as at the Trade Date, is not a scheduled Business Day in New York, no adjustment shall be made on account of the fact that such date is not a Business Day in New York.
|
|
Disruption Events and Fallbacks:
|
|
Price Source Disruption:
|
Applicable
|
Price Materiality:
|
Applicable
|
Primary Rate:
|
BRL PTAX (BRL09)
|
Secondary Rate:
|
EMTA BRL Industry Survey Rate (BRL12), or EMTA BRL Indicative Survey Rate (BRL13), as the case may be.
|
Price Materiality Percentage:
|
3.0%,
provided
,
however
, that if there are insufficient responses on the Valuation Date to the EMTA BRL Industry Survey or the EMTA BRL Indicative Survey, as the case may be, the Price Materiality Percentage will also be deemed to have been met.
|
Disruption Fallbacks:
|
|
1.First Fallback Reference Price:
|
EMTA BRL Industry Survey Rate (BRL12)
|
2.Valuation Postponement
|
|
3.Second Fallback Reference Price:
|
EMTA BRL Indicative Survey Rate (BRL13)
|
4.Calculation Agent Determination of Settlement Rate:
|
|
Definition of Unscheduled Holiday:
|
“
Unscheduled Holiday
” shall mean, for the purpose of this Transaction, that a day is not a Brazil Business Day and a Business Day and the market was not aware of such fact (by means of a public announcement or by reference to other publicly available information) until a time later than 9.00 am local time in the Principal Financial Center(s) of the Reference Currency two Brazil Business Days and Business Days prior to the Valuation Date,
provided
,
however
, that if the next day is also an Unscheduled Holiday, the Spot Rate will be determined by the Calculation Agent on such day in its sole discretion acting in good faith in a commercially reasonable manner having taken into account relevant market practice and by reference to such additional sources as it deems appropriate.
|
“Valuation Postponement” for Price Source Disruption:
|
“
Valuation Postponement
” means, for purposes of obtaining a Settlement Rate, that the Spot Rate will be determined on the Business Day first succeeding the day on which the Price Source Disruption ceases to exist, unless the Price Source Disruption continues to exist (measured from the date, that, but for the occurrence of the Price Source Disruption, would have been the Valuation Date) for a consecutive number of calendar days equal to the Maximum Days of Postponement. In such event, the Spot Rate will be determined on the next Business Day after the Maximum Days of Postponement in accordance with the next applicable Disruption Fallback.
|
Cumulative Events:
|
Notwithstanding anything herein to the contrary, in no event shall the total number of consecutive calendar days during which either (i) valuation is deferred due to an Unscheduled Holiday, or (ii) a Valuation Postponement shall occur (or any combination of (i) and (ii)), exceed 30 consecutive calendar days in the aggregate. Accordingly, (x) if, upon the lapse of any such 30-day period, an Unscheduled Holiday shall have occurred or be continuing on the day following such period, then such day shall be deemed to be a Valuation Date, and (y) if, upon the lapse of any such 30-day period, a Price Source Disruption shall have occurred or be continuing on the day following such period, then Valuation Postponement shall not apply and the Spot Rate shall be determined in accordance with the next Disruption Fallback.
|
Maximum Days of Postponement:
|
Thirty (30) calendar days
|
Relevant City for Business Day for Valuation Dates:
|
Any of Rio de Janeiro, Sao Paulo or Brasilia
and
New York
|
No Adjustments to the Termination Date:
|
For the avoidance of doubt, any adjustment to, or deferral of, (A) the date on which a Spot Rate is determined, (B) any Fixed Rate Payer I Payment Date or (C) the Final Exchange Date pursuant to the terms and provisions hereof shall not adjust or otherwise affect the occurrence of the Termination Date for the purposes of determining the duration of any Calculation Period.
|
Payment Date Adjustments:
|
The parties hereto agree that if the date on which a Spot Rate is determined is adjusted or deferred in accordance with the terms and provisions hereof as the result of the occurrence of an Unscheduled Holiday or on account of a Price Source Disruption, then the applicable Fixed Rate Payer I Payment Date or the Final Exchange Date, as applicable, shall occur on the first Business Day in New York immediately following such adjusted or deferred date on which the Spot Rate is determined.
|
Calculation Agent:
|
Party A
|
Bank of America
|
Arcos Dorados Holdings Inc.
|
|||
/s/ Katherine A. Andrews
|
By:
|
/s/ Diego Pace
|
||
Katherine A. Andrews
|
Name:
|
Diego Pace
|
||
Managing Director, Sr. Group Operations Manager
|
Title:
|
Corp. Finance Director
|
||
Authorised Signatory
|
ARTICLE I DEFINITIONS |
1
|
||
Section 1.1
|
Defined Terms
|
1
|
|
Section 1.2
|
Rules of Construction
|
16
|
|
ARTICLE II LOANS |
18
|
||
Section 2.1
|
Loans
|
18
|
|
Section 2.2
|
Borrowing
|
18
|
|
Section 2.3
|
Termination of Commitment
|
19
|
|
Section 2.4
|
Repayment of the Loans
|
19
|
|
Section 2.5
|
Optional Prepayment; Mandatory Prepayment
|
19
|
|
Section 2.6
|
Interest Rates and Interest Payment Dates
|
19
|
|
Section 2.7
|
Commitment Fee
|
20
|
|
Section 2.8
|
Note
|
20
|
|
Section 2.9
|
Inability to Determine Interest Rate
|
20
|
|
Section 2.10
|
Payments Generally
|
21
|
|
Section 2.11
|
Illegality
|
21
|
|
Section 2.12
|
Taxes
|
22
|
|
Section 2.13
|
Requirements of Law
|
23
|
|
Section 2.14
|
Mitigation Obligations
|
24
|
|
Section 2.15
|
Breakage Costs
|
24
|
|
Section 2.16
|
Survival
|
24
|
|
ARTICLE III REPRESENTATIONS AND WARRANTIES |
24
|
||
Section 3.1
|
Financial Condition; No Material Adverse Effect
|
24
|
|
Section 3.2
|
Existence and Qualification; Power
|
25
|
|
Section 3.3
|
Authorization; Enforceable Obligations; No Contravention
|
25
|
|
Section 3.4
|
Governmental Authorization; Other Consents
|
25
|
|
Section 3.5
|
No Material Litigation
|
25
|
|
Section 3.6
|
Taxes
|
26
|
|
Section 3.7
|
Compliance with Laws
|
26
|
|
Section 3.8
|
Intellectual Property; Licenses, Etc
|
26
|
|
Section 3.9
|
Ranking
|
27
|
|
Section 3.10
|
Full Disclosure
|
27
|
|
Section 3.11
|
Form of Documents
|
27
|
|
Section 3.12
|
Environmental Matters
|
27
|
|
Section 3.13
|
Use of Proceeds
|
27
|
|
Section 3.14
|
Investment Company Act
|
27
|
|
Section 3.15
|
Anti-Terrorism; Sanctions
|
27
|
|
Section 3.16
|
Consolidated EBITDA of Guarantors
|
28
|
ARTICLE IV CONDITIONS PRECEDENT |
28
|
||
Section 4.1
|
Conditions to Closing
|
28
|
|
Section 4.2
|
Conditions to each Borrowing
|
29
|
|
ARTICLE V AFFIRMATIVE COVENANTS |
29
|
||
Section 5.1
|
Financial Statements and Other Information
|
29
|
|
Section 5.2
|
Other Affirmative Covenants
|
31
|
|
Section 5.3
|
Use of Proceeds
|
32
|
|
Section 5.4
|
Rank of Obligations
|
32
|
|
Section 5.5
|
Subsidiaries
|
32
|
|
ARTICLE VI NEGATIVE COVENANTS |
34
|
||
Section 6.1
|
Liens
|
34
|
|
Section 6.2
|
[Reserved.]
|
36
|
|
Section 6.3
|
Fundamental Changes
|
36
|
|
Section 6.4
|
Affiliate Transactions
|
37
|
|
Section 6.5
|
Lines of Businesses
|
39
|
|
Section 6.6
|
Consolidated Net Indebtedness to EBITDA Ratio
|
39
|
|
Section 6.7
|
Anti-Terrorism; Sanctions
|
39
|
|
ARTICLE VII EVENTS OF DEFAULT |
39
|
||
Section 7.1
|
Events of Default
|
39
|
|
ARTICLE VIII GUARANTY |
41
|
||
Section 8.1
|
Guaranty
|
41
|
|
Section 8.2
|
Guaranty Unconditional
|
42
|
|
Section 8.3
|
Discharge only upon Payment in Full; Reinstatement in Certain Circumstances
|
42
|
|
Section 8.4
|
Waivers by the Guarantors
|
42
|
|
Section 8.5
|
Subrogation
|
43
|
|
Section 8.6
|
Stay of Acceleration
|
44
|
|
ARTICLE IX MISCELLANEOUS |
44
|
||
Section 9.1
|
Right of Set-Off
|
44
|
|
Section 9.2
|
New York Time
|
44
|
|
Section 9.3
|
Amendments; Waivers
|
44
|
|
Section 9.4
|
Notices
|
44
|
|
Section 9.5
|
Successors and Assigns
|
45
|
|
Section 9.6
|
Reimbursement of Costs and Expenses
|
46
|
|
Section 9.7
|
Indemnification
|
46
|
|
Section 9.8
|
Severability
|
47
|
|
Section 9.9
|
Counterparts
|
47
|
|
Section 9.10
|
Governing Law; Jurisdiction
|
47
|
|
Section 9.11
|
Jury Trial Waiver
|
48
|
Section 9.12
|
Process Agent Appointment
|
48
|
|
Section 9.13
|
Waiver of Immunity
|
48
|
|
Section 9.14
|
USA PATRIOT Act
|
49
|
|
Section 9.15
|
Judgment Currency
|
49
|
|
Section 9.16
|
Confidentiality
|
49
|
|
Section 9.17
|
Entire Agreement
|
50
|
List of Schedules
|
||
Schedule 1.1
|
Material Subsidiaries
|
|
Schedule 3.5
|
Certain Material Litigation
|
|
Schedule 3.6
|
Certain Taxes
|
|
List of Exhibits
|
||
Exhibit A
|
Form of Borrowing Notice
|
|
Exhibit B
|
Form of Note
|
|
Exhibit C
|
Form of Compliance Certificate
|
|
Exhibit D-1
|
Form of New York Counsel Opinion
|
|
Exhibit D-2
|
Form of Mexican Counsel Opinion
|
|
Exhibit D-3
|
Form of Brazilian Counsel Opinion
|
|
Exhibit D-4
|
Form of Puerto Rican Counsel Opinion
|
|
Exhibit D-5
|
Form of Dutch Counsel Opinion
|
|
Exhibit E
|
Form of Subsidiary Joinder Agreement
|
ARCOS DORADOS B.V., as Borrower | ||||
By:
|
/s/ Diego Pace | |||
Name: | Diego Pace | |||
Title: | Attorney-in-Fact | |||
ARCOS SERCAL SERVICIOS, S.A. DE C.V., as a Guarantor | ||||
By:
|
/s/ Diego Pace | |||
Name: | Diego Pace | |||
Title: | Attorney-in-Fact | |||
ARCOS SERCAL INMOBILIARIA, S. DE R.L. DE C.V., as a Guarantor | ||||
By:
|
/s/ Diego Pace | |||
Name: | Diego Pace | |||
Title: | Attorney-in-Fact | |||
ARCOS DOURADOS COMERCIO DE ALIMENTOS, LTDA., as a Guarantor | ||||
By:
|
/s/ Diego Pace | |||
Name: | Diego Pace | |||
Title: | Attorney-in-Fact | |||
ARCOS DORADOS PUERTO RICO, INC., as a Guarantor | ||||
By:
|
/s/ Diego Pace | |||
Name: | Diego Pace | |||
Title: | Attorney-in-Fact | |||
GOLDEN ARCH DEVELOPMENT CORPORATION, as a Guarantor | ||||
By:
|
/s/ Diego Pace | |||
Name: | Diego Pace | |||
Title: | Attorney-in-Fact | |||
STATE OF NEW YORK | ) |
) | |
COUNTY OF NEW YORK
|
) |
By: | /s/ Margaret A. DiSarro |
STATE OF NEW YORK | ) |
) | |
COUNTY OF NEW YORK
|
) |
By: | /s/ Margaret A. DiSarro |
STATE OF NEW YORK | ) |
) | |
COUNTY OF NEW YORK
|
) |
By: | /s/ Margaret A. DiSarro |
STATE OF NEW YORK | ) |
) | |
COUNTY OF NEW YORK
|
) |
By: | /s/ Margaret A. DiSarro |
STATE OF NEW YORK | ) |
) | |
COUNTY OF NEW YORK
|
) |
By: | /s/ Margaret A. DiSarro |
STATE OF NEW YORK | ) |
) | |
COUNTY OF NEW YORK
|
) |
By: | /s/ Margaret A. DiSarro |
LENDER: | ||||
BANK OF AMERICA, N.A., as Lender | ||||
By:
|
/s/ Juan Pablo Cuevas | |||
Name: | Juan Pablo Cuevas | |||
Title: | Managing Director | |||
STATE OF NEW YORK | ) |
) | |
COUNTY OF NEW YORK
|
) |
By: |
/s/ Sovanni Bun
|
Arcos Dorados Argentina S.A.
|
Arcos Dourados Comércio de Alimentos Ltda.
|
Arcos Sercal Servicios, S.A. de C.V.
|
Arcos Sercal Inmobiliaria, S. de R.L. de C.V.
|
Arcos Dorados Puerto Rico, Inc.
|
Golden Arch Development Corporation
|
(i)
|
Payments of interest by a Guarantor organized under the laws of Puerto Rico will not be subject to Puerto Rico income tax withholding at source provided the recipient of the interest is (a) a corporation or partnership organized under the laws of a jurisdiction other than Puerto Rico, (b) not engaged in trade or business in Puerto Rico for Puerto Rico income tax purposes and (c) not a related person of the Borrower or any Guarantor within the meaning of Sections 1092.01(a)(3) and 1010.05 of the Internal Revenue Code for the New Puerto Rico and (ii) payments of fees under the Loan Agreement to entities not engaged in trade or business in Puerto Rico for Puerto Rico income tax purposes will not be subject to Puerto Rico income tax withholding at source provided the services being compensated are rendered outside Puerto Rico
|
(ii)
|
Payments of interest made by a Guarantor organized under the laws of Puerto Rico to a Lender that is a related party of the Borrower or any Guarantor within the meaning of Sections 1092.01(a)(3) and 1010.05 of the PR Code will be subject to a 29% Puerto Rico income tax withholding at source.
|
(iii)
|
Payments to entities not organized under the laws of Puerto Rico that are nonresident of Puerto Rico for Puerto Rico tax purposes constituting fees for services rendered in Puerto Rico will be subject to a 29% Puerto Rico income tax withholding at source.
|
To:
|
Bank of America, N.A., as Lender
|
|
Ladies and Gentlemen:
|
Date
|
Amount of Loan Made
|
End of Interest Period
|
Amount of Principal or Interest Paid This Date
|
Outstanding Principal Balance This Date
|
Notation Made By
|
|||||
To:
|
Bank of America, N.A., as Lender
|
|
Ladies and Gentlemen:
|
ARCOS DORADOS B.V.
|
||||
By:
|
||||
Name: | ||||
Title: | ||||
I.
|
Section 5.5 – Guarantors’ Share of Consolidated EBITDA.
|
|
A.
|
Consolidated EBITDA of the Borrower for Statement Period:
|
|
1.
|
Consolidated Net Income of the Borrower during Statement Period:
|
$
|
|
2.
|
Consolidated Interest Expense of the Borrower during Statement Period:
|
$
|
|
3.
|
Consolidated Income Tax Expense of the Borrower during Statement Period:
|
$
|
|
4.
|
Consolidated Non-cash Charges of the Borrower during Statement Period:
|
$
|
|
5.
|
any non-operating and/or non-recurring charges, expenses or losses of the Borrower and its Subsidiaries during Statement Period:
|
$
|
|
6.
|
the amount of loss on any sale of accounts receivables and related assets to a Securitization Subsidiary in connection with a Permitted Receivables Financing:
|
$
|
|
7.
|
all non-cash credits and gains increasing Consolidated Net Income for the Borrower during Statement Period:
|
$
|
|
8.
|
all cash payments made the Borrower and its Subsidiaries during Statement Period relating to non-cash charges that were added back in determining Consolidated EBITDA in any prior period:
|
$
|
|
9.
|
non-operating and/or non-recurring income or gains (less all fees and expenses related thereto) increasing Consolidated Net Income of the Borrower and its Subsidiaries during Statement Period:
|
$
|
|
10.
|
Consolidated EBITDA (Line I.A.1
plus
Line I.A.2
plus
Line I.A.3
plus
Line I.A.4
plus
Line I.A.5
plus
Line I.A.6
less
Line I.A.7
less
Line I.A.8
less
Line I.A.9):
|
$
|
|
B.
|
Consolidated EBITDA attributable to Guarantors:
|
|
1.
|
portion of Consolidated EBITDA attributable to the Guarantors within the Territory of the United Mexican States on a Combined/Consolidated Basis
|
$
|
|
2.
|
portion of Consolidated EBITDA attributable to the Guarantors within the Territory of Brazil on a Combined/Consolidated Basis
|
$
|
|
3.
|
portion of Consolidated EBITDA attributable to the Guarantors within the Territory of the Commonwealth of Puerto Rico on a Combined/Consolidated Basis
|
$
|
|
[4.
|
portion of Consolidated EBITDA attributable to within the Territory of [country] on a Combined/Consolidated Basis]
|
$
|
|
[5].
|
Consolidated EBITDA (Line I.B.1
plus
Line I.B.2
plus
Line I.B.3 [
plus
Line I.B.4]
1
):
|
$
|
|
C.
|
Guarantors’ share of Consolidated EBITDA (Line I.B.[5]
divided
by
Line I.A.10):
|
____%
|
Minimum permitted:
|
80% |
II.
|
Section 6.6 – Consolidated Net Indebtedness to EBITDA Ratio.
|
A.
|
Consolidated Net Indebtedness of Borrower as at Statement Date:
|
|
1.
|
Consolidated Indebtedness:
|
$
|
|
2.
|
cash and cash equivalents and consolidated marketable securities recorded as current assets (except for any Capital Stock in any Person):
|
$
|
|
3.
|
Consolidated Net Indebtedness (Line II.A1
less
Line II.A.2):
|
$
|
|
B.
|
Consolidated EBITDA for Statement Period (from Line I.A.10):
|
$
|
|
C.
|
Consolidated Net Indebtedness to EBITDA Ratio (Line II.A.3 – I.A.10):
|
______
|
Maximum permitted:
|
2.50 to 1
|
[ADDITIONAL GUARANTOR]
|
|||
By:
|
|||
Name: | |||
Title: | |||
Address: |
ACKNOWLEDGED:
BANK OF AMERICA, N.A., as the Lender
|
||
By:
|
||
Name: | ||
Title: | ||
ARCOS DORADOS B.V., as Borrower | ||||
By:
|
/s/ Diego Pace | |||
Name: | Diego Pace | |||
Title: | Attorney-in-Fact | |||
ARCOS SERCAL SERVICIOS, S.A. DE C.V., as a Guarantor | ||||
By:
|
/s/ Diego Pace | |||
Name: | Diego Pace | |||
Title: | Attorney-in-Fact | |||
ARCOS SERCAL INMOBILIARIA, S. DE R.L. DE C.V., as a Guarantor | ||||
By:
|
/s/ Diego Pace | |||
Name: | Diego Pace | |||
Title: | Attorney-in-Fact | |||
ARCOS DOURADOS COMERCIO DE ALIMENTOS, LTDA., as a Guarantor | ||||
By:
|
/s/ Diego Pace | |||
Name: | Diego Pace | |||
Title: | Attorney-in-Fact | |||
ARCOS DORADOS PUERTO RICO, INC., as a Guarantor | ||||
By:
|
/s/ Diego Pace | |||
Name: | Diego Pace | |||
Title: | Attorney-in-Fact | |||
GOLDEN ARCH DEVELOPMENT CORPORATION, as a Guarantor | ||||
By:
|
/s/ Diego Pace | |||
Name: | Diego Pace | |||
Title: | Attorney-in-Fact | |||
STATE OF NEW YORK | ) |
) | |
COUNTY OF NEW YORK
|
) |
By: | /s/ Margaret A. DiSarro |
STATE OF NEW YORK | ) |
) | |
COUNTY OF NEW YORK
|
) |
By: | /s/ Margaret A. DiSarro |
STATE OF NEW YORK | ) |
) | |
COUNTY OF NEW YORK
|
) |
By: | /s/ Margaret A. DiSarro |
STATE OF NEW YORK | ) |
) | |
COUNTY OF NEW YORK
|
) |
By: | /s/ Margaret A. DiSarro |
STATE OF NEW YORK | ) |
) | |
COUNTY OF NEW YORK
|
) |
By: | /s/ Margaret A. DiSarro |
STATE OF NEW YORK | ) |
) | |
COUNTY OF NEW YORK
|
) |
By: | /s/ Margaret A. DiSarro |
LENDER: | ||||
BANK OF AMERICA, N.A., as Lender | ||||
By:
|
/s/ Juan Pablo Cuevas | |||
Name: | Juan Pablo Cuevas | |||
Title: | Managing Director | |||
STATE OF NEW YORK | ) |
) | |
COUNTY OF NEW YORK
|
) |
By: | /s/ Mabel Soriano |
Management Operations Company
|
Delaware
|
Operaciones Arcos Dorados de Perú, S.A.
|
Perú
|
Restaurant Realty of Mexico, Inc.
|
Delaware
|
Sistemas Central America, S.A.
|
Panama
|
Sistemas McOpCo Panama, S.A.
|
Panama
|
Arcos Dorados Latam LLC
|
Delaware
|
SEM Panama SA
|
Panama
|
1.
|
I have reviewed this annual report on Form 20-F of Arcos Dorados Holdings Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;
|
4.
|
The company’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have:
|
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
d)
|
Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting; and
|
5.
|
The company’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company’s auditors and the audit committee of the company’s board of directors (or persons performing the equivalent functions):
|
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company’s ability to record, process, summarize and report financial information; and
|
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal control over financial reporting.
|
/s/ Woods Staton
|
Woods Staton
|
Chief Executive Officer
|
1.
|
I have reviewed this annual report on Form 20-F of Arcos Dorados Holdings Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;
|
4.
|
The company’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have:
|
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
c)
|
Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
d)
|
Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting; and
|
5.
|
The company’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company’s auditors and the audit committee of the company’s board of directors (or persons performing the equivalent functions):
|
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company’s ability to record, process, summarize and report financial information; and
|
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal control over financial reporting.
|
/s/ Germán Lemonnier
|
Germán Lemonnier
|
Chief Financial Officer
|
|
1.
|
the Report fully complies with the requirements of Section 13(a) or 15(d) of the Exchange Act; and
|
|
2.
|
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Arcos Dorados Holdings Inc.
|
/s/ Woods Staton
|
Name: Woods Staton
|
Chief Executive Officer
|
|
1.
|
the Report fully complies with the requirements of Section 13(a) or 15(d) of the Exchange Act; and
|
|
2.
|
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Arcos Dorados Holdings Inc.
|
/s/ Germán Lemonnier
|
Name: Germán Lemonnier
|
Chief Financial Officer
|
Euromonitor International Ltd
|
||
By:
|
/s/ Tom Kitchin
|
|
Name:
|
Tom Kitchin
|
|
Title:
|
Director
|
(1)
|
Registration Statement (Form F-3ASR No. 333-187531) of Arcos Dorados Holdings Inc., and
|
(2)
|
Registration Statement (Form S-8 No. 333-173496) pertaining to the Equity Incentive Plan of Arcos Dorados Holdings Inc;
|
/s/ Pistrelli, Henry Martin Y Asociados S.R.L.
|
||
PISTRELLI, HENRY MARTIN Y ASOCIADOS S.R.L.
|
||
Member of Ernst & Young Global
|