Title of each class
|
|
Trading Symbol
|
|
Name of each exchange on which registered
|
Class A shares, no par value
|
|
ARCO
|
|
New York Stock Exchange
|
Large accelerated filer
|
x
|
Accelerated filer
|
☐
|
Non-accelerated filer
|
☐
|
Emerging growth company
|
☐
|
U.S. GAAP
|
x
|
International Financial Reporting Standards as issued by the International Accounting Standards Board
|
o
|
Other
|
o
|
|
|
Page
|
|
|
•
|
effects of COVID-19 pandemic and private or government measures that could negatively affect the global economy and our markets’ economy and business;
|
•
|
changes in our liquidity or the availability of lines of credit and other sources of financing, including as a result of the COVID-19 pandemic;
|
•
|
general economic, political, demographic and business conditions in Latin America and the Caribbean;
|
•
|
fluctuations in inflation and exchange rates in Latin America and the Caribbean;
|
•
|
our ability to implement our growth strategy;
|
•
|
the success of operating initiatives, including advertising and promotional efforts and new product and concept development by us and our competitors;
|
•
|
our ability to compete and conduct our business in the future;
|
•
|
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 COVID-19, “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;
|
•
|
the availability, location and lease terms for restaurant development;
|
•
|
our intention to focus on our restaurant reimaging plan;
|
•
|
our franchisees, including their business and financial viability and the timely payment of our franchisees’ obligations due to us and to McDonald’s;
|
•
|
our ability to comply with the requirements of the MFAs, including McDonald’s standards;
|
•
|
our decision to own and operate restaurants or to operate under franchise agreements;
|
•
|
the availability of qualified restaurant personnel for us and for our franchisees, and the ability to retain such personnel;
|
•
|
changes in commodity costs, labor, supply, fuel, utilities, distribution and other operating costs;
|
•
|
changes in labor laws;
|
•
|
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;
|
•
|
changes in government regulation;
|
•
|
material changes in tax legislation;
|
•
|
other factors that may affect our financial condition, liquidity and results of operations; and
|
•
|
other risk factors discussed under “Item 3. Key Information—D. Risk Factors.”
|
|
|
For the Years Ended December 31,
|
||||||||||||||||||
|
|
2019
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
||||||||||
|
|
(in thousands of U.S. dollars, except for per share data)
|
||||||||||||||||||
Income Statement Data:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Sales by Company-operated restaurants
|
|
$
|
2,812,287
|
|
|
$
|
2,932,609
|
|
|
$
|
3,162,256
|
|
|
$
|
2,803,334
|
|
|
$
|
2,930,379
|
|
Revenues from franchised restaurants
|
|
146,790
|
|
|
148,962
|
|
|
157,269
|
|
|
125,296
|
|
|
122,361
|
|
|||||
Total revenues
|
|
2,959,077
|
|
|
3,081,571
|
|
|
3,319,525
|
|
|
2,928,630
|
|
|
3,052,740
|
|
|||||
Company-operated restaurant expenses:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Food and paper
|
|
(1,007,584)
|
|
|
(1,030,499)
|
|
|
(1,110,240)
|
|
|
(1,012,976)
|
|
|
(1,037,487)
|
|
|||||
Payroll and employee benefits
|
|
(567,653)
|
|
|
(607,793)
|
|
|
(683,954)
|
|
|
(607,082)
|
|
|
(660,773)
|
|
|||||
Occupancy and other operating
|
|
(799,633)
|
|
|
(803,539)
|
|
|
(842,519)
|
|
|
(752,428)
|
|
|
(793,622)
|
|
|||||
Royalty fees
|
|
(155,388)
|
|
|
(157,886)
|
|
|
(163,954)
|
|
|
(142,777)
|
|
|
(149,089)
|
|
|||||
Franchised restaurants—occupancy expenses
|
|
(61,278)
|
|
|
(67,927)
|
|
|
(69,836)
|
|
|
(55,098)
|
|
|
(54,242)
|
|
|||||
General and administrative expenses
|
|
(212,515)
|
|
|
(229,324)
|
|
|
(244,664)
|
|
|
(221,075)
|
|
|
(270,680)
|
|
|||||
Other operating income (expenses), net
|
|
4,910
|
|
|
(61,145)
|
|
|
68,577
|
|
|
41,386
|
|
|
6,560
|
|
|||||
Total operating costs and expenses
|
|
(2,799,141)
|
|
|
(2,958,113)
|
|
|
(3,046,590)
|
|
|
(2,750,050)
|
|
|
(2,959,333)
|
|
|||||
Operating income
|
|
159,936
|
|
|
123,458
|
|
|
272,935
|
|
|
178,580
|
|
|
93,407
|
|
|||||
Net interest expense
|
|
(52,079)
|
|
|
(52,868)
|
|
|
(68,357)
|
|
|
(66,880)
|
|
|
(64,407)
|
|
|||||
Gain (loss) from derivative instruments
|
|
439
|
|
|
(565)
|
|
|
(7,065)
|
|
|
(3,065)
|
|
|
(2,894)
|
|
|||||
Foreign currency exchange results
|
|
12,754
|
|
|
14,874
|
|
|
(14,265)
|
|
|
32,354
|
|
|
(54,032)
|
|
|||||
Other non-operating (expenses) income, net
|
|
(2,097)
|
|
|
270
|
|
|
(435)
|
|
|
(2,360)
|
|
|
(627)
|
|
|||||
Income (loss) before income taxes
|
|
118,953
|
|
|
85,169
|
|
|
182,813
|
|
|
138,629
|
|
|
(28,553)
|
|
|||||
Income tax expense
|
|
(38,837)
|
|
|
(48,136)
|
|
|
(53,314)
|
|
|
(59,641)
|
|
|
(22,816)
|
|
|||||
Net income (loss)
|
|
80,116
|
|
|
37,033
|
|
|
129,499
|
|
|
78,988
|
|
|
(51,369)
|
|
|||||
Less: Net income attributable to non-controlling interests
|
|
(220)
|
|
|
(186)
|
|
|
(333)
|
|
|
(178)
|
|
|
(264)
|
|
|||||
Net income (loss) attributable to Arcos Dorados Holdings Inc.
|
|
79,896
|
|
|
36,847
|
|
|
129,166
|
|
|
78,810
|
|
|
(51,633)
|
|
|||||
Earnings (Loss) per share:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic net income (loss) per common share attributable to Arcos Dorados
|
|
$
|
0.39
|
|
|
$
|
0.18
|
|
|
$
|
0.61
|
|
|
$
|
0.37
|
|
|
$
|
(0.25)
|
|
Diluted net income (loss) per common share attributable to Arcos Dorados
|
|
$
|
0.39
|
|
|
$
|
0.18
|
|
|
$
|
0.61
|
|
|
$
|
0.37
|
|
|
$
|
(0.25)
|
|
|
|
As of December 31,
|
|
||||||||||||||||||||||||||||||||||||||
|
|
2019
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
|
||||||||||||||||||||||||||||||
|
|
(in thousands of U.S. dollars, except for share data)
|
|
||||||||||||||||||||||||||||||||||||||
Balance Sheet Data:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||
Cash and cash equivalent
|
|
$
|
121,880
|
|
|
$
|
197,282
|
|
|
$
|
308,491
|
|
|
$
|
194,803
|
|
|
$
|
112,519
|
|
|
||||||||||||||||||||
Total current assets
|
|
405,368
|
|
|
464,562
|
|
|
653,037
|
|
|
445,190
|
|
|
378,996
|
|
|
|||||||||||||||||||||||||
Property and equipment, net
|
|
960,986
|
|
|
856,192
|
|
|
890,736
|
|
|
847,966
|
|
|
833,357
|
|
|
|||||||||||||||||||||||||
Total non-current assets
|
|
2,152,317
|
|
|
1,113,477
|
|
|
1,150,706
|
|
|
1,059,863
|
|
|
1,024,206
|
|
|
|||||||||||||||||||||||||
Total assets
|
|
2,557,685
|
|
|
1,578,039
|
|
|
1,803,743
|
|
|
1,505,053
|
|
|
1,403,202
|
|
|
|||||||||||||||||||||||||
Accounts payable
|
|
259,577
|
|
|
242,455
|
|
|
303,452
|
|
|
217,914
|
|
|
187,685
|
|
|
|||||||||||||||||||||||||
Short-term debt and current portion of long-term debt
|
|
16,529
|
|
|
4,192
|
|
|
4,359
|
|
|
28,099
|
|
|
163,740
|
|
|
|||||||||||||||||||||||||
Total current liabilities
|
|
595,447
|
|
|
493,312
|
|
|
605,583
|
|
|
548,308
|
|
|
577,314
|
|
|
|||||||||||||||||||||||||
Long-term debt, excluding current portion
|
|
623,575
|
|
|
626,424
|
|
|
629,142
|
|
|
551,580
|
|
|
491,327
|
|
|
|||||||||||||||||||||||||
Total non-current liabilities
|
|
1,540,672
|
|
|
691,968
|
|
|
702,018
|
|
|
605,169
|
|
|
538,998
|
|
|
|||||||||||||||||||||||||
Total liabilities
|
|
2,136,119
|
|
|
1,185,280
|
|
|
1,307,601
|
|
|
1,153,477
|
|
|
1,116,312
|
|
|
|||||||||||||||||||||||||
Total common stock
|
|
516,119
|
|
|
512,760
|
|
|
509,647
|
|
|
506,884
|
|
|
504,772
|
|
|
|||||||||||||||||||||||||
Total equity
|
|
421,566
|
|
|
392,759
|
|
|
496,142
|
|
|
351,576
|
|
|
286,890
|
|
|
|||||||||||||||||||||||||
Total liabilities and equity
|
|
2,557,685
|
|
|
1,578,039
|
|
|
1,803,743
|
|
|
1,505,053
|
|
|
1,403,202
|
|
|
|||||||||||||||||||||||||
Shares outstanding
|
|
204,070,029
|
|
|
205,232,247
|
|
|
211,072,508
|
|
|
210,711,224
|
|
|
210,538,896
|
|
|
|
|
For the Years Ended December 31,
|
||||||||||||||||||||||||||||||||||||||||||
|
|
2019
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
||||||||||||||||||||||||||||||||||
|
|
(in thousands of U.S. dollars, except percentages)
|
||||||||||||||||||||||||||||||||||||||||||
Other Data:
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||
Total Revenues
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||
Brazil
|
|
$
|
1,385,566
|
|
|
$
|
1,345,453
|
|
|
$
|
1,496,573
|
|
|
|
$
|
1,333,237
|
|
|
|
$
|
1,361,989
|
|
|
|||||||||||||||||||||
Caribbean division(1)
|
|
399,251
|
|
|
483,743
|
|
|
474,822
|
|
|
|
409,671
|
|
|
|
398,144
|
|
|
||||||||||||||||||||||||||
NOLAD
|
|
431,266
|
|
|
406,848
|
|
|
386,874
|
|
|
|
363,965
|
|
|
|
367,364
|
|
|
||||||||||||||||||||||||||
SLAD
|
|
742,994
|
|
|
845,527
|
|
|
961,256
|
|
|
|
821,757
|
|
|
|
925,243
|
|
|
||||||||||||||||||||||||||
Total
|
|
2,959,077
|
|
|
3,081,571
|
|
|
3,319,525
|
|
|
|
2,928,630
|
|
|
|
3,052,740
|
|
|
||||||||||||||||||||||||||
Operating Income
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||
Brazil
|
|
$
|
164,342
|
|
|
$
|
159,511
|
|
|
$
|
160,608
|
|
|
|
$
|
122,636
|
|
|
|
$
|
116,820
|
|
|
|||||||||||||||||||||
Caribbean division(1)
|
|
(1,100)
|
|
|
(49,567)
|
|
|
1,538
|
|
|
|
(12,392)
|
|
|
|
(40,102)
|
|
|
||||||||||||||||||||||||||
NOLAD
|
|
16,539
|
|
|
7,726
|
|
|
99,152
|
|
|
|
45,145
|
|
|
|
8,710
|
|
|
||||||||||||||||||||||||||
SLAD
|
|
42,410
|
|
|
53,777
|
|
|
71,718
|
|
|
|
66,359
|
|
|
|
78,022
|
|
|
||||||||||||||||||||||||||
Corporate and others and purchase price allocation
|
|
(62,255)
|
|
|
(47,989)
|
|
|
(60,081)
|
|
|
|
(43,168)
|
|
|
|
(70,043)
|
|
|
||||||||||||||||||||||||||
Total
|
|
159,936
|
|
|
123,458
|
|
|
272,935
|
|
|
|
178,580
|
|
|
|
93,407
|
|
|
||||||||||||||||||||||||||
Operating Margin(2)
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||
Brazil
|
|
11.9
|
%
|
|
11.9
|
%
|
|
10.7
|
|
%
|
|
9.2
|
|
%
|
|
8.6
|
|
%
|
||||||||||||||||||||||||||
Caribbean division(1)
|
|
(0.3)
|
|
|
(10.2)
|
|
|
0.3
|
|
|
|
(3.0)
|
|
|
|
(10.1)
|
|
|
||||||||||||||||||||||||||
NOLAD
|
|
3.8
|
|
|
1.9
|
|
|
25.6
|
|
|
|
12.4
|
|
|
|
2.4
|
|
|
||||||||||||||||||||||||||
SLAD
|
|
5.7
|
|
|
6.4
|
|
|
7.5
|
|
|
|
8.1
|
|
|
|
8.4
|
|
|
||||||||||||||||||||||||||
Total
|
|
5.4
|
|
|
4.0
|
|
|
8.2
|
|
|
|
6.1
|
|
|
|
3.1
|
|
|
||||||||||||||||||||||||||
Adjusted EBITDA(3)
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||
Brazil
|
|
$
|
227,844
|
|
|
$
|
218,391
|
|
|
$
|
218,172
|
|
|
|
$
|
168,076
|
|
|
|
$
|
174,102
|
|
|
|||||||||||||||||||||
Caribbean division(1)
|
|
24,955
|
|
|
(8,281)
|
|
|
40,844
|
|
|
|
18,049
|
|
|
|
2,059
|
|
|
||||||||||||||||||||||||||
NOLAD
|
|
39,027
|
|
|
32,313
|
|
|
33,717
|
|
|
|
36,288
|
|
|
|
31,424
|
|
|
||||||||||||||||||||||||||
SLAD
|
|
63,120
|
|
|
73,670
|
|
|
87,083
|
|
|
|
76,327
|
|
|
|
100,718
|
|
|
||||||||||||||||||||||||||
Corporate and others
|
|
(63,171)
|
|
|
(58,096)
|
|
|
(74,879)
|
|
|
|
(60,295)
|
|
|
|
(78,132)
|
|
|
||||||||||||||||||||||||||
Total
|
|
291,775
|
|
|
257,997
|
|
|
304,937
|
|
|
|
238,445
|
|
|
|
230,171
|
|
|
||||||||||||||||||||||||||
Adjusted EBITDA Margin(4)
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||
Brazil
|
|
16.4
|
%
|
|
16.2
|
%
|
|
14.6
|
|
%
|
|
12.6
|
|
%
|
|
12.8
|
|
%
|
||||||||||||||||||||||||||
Caribbean division(1)
|
|
6.2
|
|
|
(1.7)
|
|
|
8.6
|
|
|
|
4.4
|
|
|
|
0.5
|
|
|
||||||||||||||||||||||||||
NOLAD
|
|
9.0
|
|
|
7.9
|
|
|
8.7
|
|
|
|
10.0
|
|
|
|
8.6
|
|
|
||||||||||||||||||||||||||
SLAD
|
|
8.5
|
|
|
8.7
|
|
|
9.1
|
|
|
|
9.3
|
|
|
|
10.9
|
|
|
||||||||||||||||||||||||||
Total
|
|
9.9
|
|
|
8.4
|
|
|
9.2
|
|
|
|
8.1
|
|
|
|
7.5
|
|
|
||||||||||||||||||||||||||
Other Financial Data:
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||
Working capital(5)
|
|
|
(190,079)
|
|
|
$
|
(28,750)
|
|
|
$
|
47,454
|
|
|
|
$
|
(103,118)
|
|
|
|
$
|
(198,318)
|
|
|
|||||||||||||||||||||
Capital expenditures(6)
|
|
267,893
|
|
|
197,041
|
|
|
175,636
|
|
|
|
92,282
|
|
|
|
92,055
|
|
|
||||||||||||||||||||||||||
Dividends declared per common share
|
|
$
|
0.11
|
|
|
$
|
0.10
|
|
|
$
|
—
|
|
|
|
$
|
—
|
|
|
|
$
|
—
|
|
|
|
|
As of December 31,
|
|||||||||||||
|
|
2019
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
|||||
Number of systemwide restaurants
|
|
2,293
|
|
|
2,223
|
|
|
2,188
|
|
|
2,156
|
|
|
2,141
|
|
Brazil
|
|
1,023
|
|
|
968
|
|
|
929
|
|
|
902
|
|
|
883
|
|
Caribbean division
|
|
336
|
|
|
337
|
|
|
350
|
|
|
353
|
|
|
356
|
|
NOLAD
|
|
530
|
|
|
524
|
|
|
519
|
|
|
517
|
|
|
518
|
|
SLAD
|
|
404
|
|
|
394
|
|
|
390
|
|
|
384
|
|
|
384
|
|
Number of Company-operated restaurants
|
|
1,580
|
|
|
1,540
|
|
|
1,546
|
|
|
1,553
|
|
|
1,588
|
|
Brazil
|
|
612
|
|
|
584
|
|
|
579
|
|
|
584
|
|
|
615
|
|
Caribbean division
|
|
251
|
|
|
251
|
|
|
263
|
|
|
266
|
|
|
267
|
|
NOLAD
|
|
364
|
|
|
362
|
|
|
363
|
|
|
365
|
|
|
364
|
|
SLAD
|
|
353
|
|
|
343
|
|
|
341
|
|
|
338
|
|
|
342
|
|
Number of franchised restaurants
|
|
713
|
|
|
683
|
|
|
642
|
|
|
603
|
|
|
553
|
|
Brazil
|
|
411
|
|
|
384
|
|
|
350
|
|
|
318
|
|
|
268
|
|
Caribbean division
|
|
85
|
|
|
86
|
|
|
87
|
|
|
87
|
|
|
89
|
|
NOLAD
|
|
166
|
|
|
162
|
|
|
156
|
|
|
152
|
|
|
154
|
|
SLAD
|
|
51
|
|
|
51
|
|
|
49
|
|
|
46
|
|
|
42
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Currency devaluations in Venezuela have had a significant effect on our income statements and have impacted the comparability of our income statements. See “Item 5. Operating and Financial Review and Prospects-A. Operating Results-Foreign Currency Translation-Venezuela.”
|
(2)
|
Operating margin is operating income divided by total revenues, expressed as a percentage.
|
(3)
|
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 “Item 5. Operating and Financial Review and Prospects-A. Operating Results-Key Business Measures.”
|
(4)
|
Adjusted EBITDA margin is Adjusted EBITDA divided by total revenues, expressed as a percentage.
|
(5)
|
Working capital equals current assets minus current liabilities.
|
(6)
|
Includes property and equipment expenditures and purchase of restaurant businesses paid at the acquisition date.
|
|
|
For the Years Ended December 31,
|
||||||||||||||||||||||
Consolidated Adjusted EBITDA Reconciliation
|
|
2019
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
||||||||||||||
|
|
(in thousands of U.S. dollars)
|
||||||||||||||||||||||
Net income (loss) attributable to Arcos Dorados Holdings Inc.
|
|
$
|
79,896
|
|
|
|
$
|
36,847
|
|
|
|
$
|
129,166
|
|
|
|
$
|
78,810
|
|
|
|
$
|
(51,633)
|
|
Plus (Less):
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Net interest expense
|
|
52,079
|
|
|
|
52,868
|
|
|
|
68,357
|
|
|
|
66,880
|
|
|
|
64,407
|
|
|||||
(Gain) loss from derivative instruments
|
|
(439)
|
|
|
|
565
|
|
|
|
7,065
|
|
|
|
3,065
|
|
|
|
2,894
|
|
|||||
Foreign currency exchange results
|
|
(12,754)
|
|
|
|
(14,874)
|
|
|
|
14,265
|
|
|
|
(32,354)
|
|
|
|
54,032
|
|
|||||
Other non-operating expenses (income), net
|
|
2,097
|
|
|
|
(270)
|
|
|
|
435
|
|
|
|
2,360
|
|
|
|
627
|
|
|||||
Income tax expense
|
|
38,837
|
|
|
|
48,136
|
|
|
|
53,314
|
|
|
|
59,641
|
|
|
|
22,816
|
|
|||||
Net income attributable to non-controlling interests
|
|
220
|
|
|
|
186
|
|
|
|
333
|
|
|
|
178
|
|
|
|
264
|
|
|||||
Operating income
|
|
159,936
|
|
|
|
123,458
|
|
|
|
272,935
|
|
|
|
178,580
|
|
|
|
93,407
|
|
|||||
Plus (Less):
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Items excluded from computation that affect operating income:
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Depreciation and amortization
|
|
123,218
|
|
|
|
105,800
|
|
|
|
99,382
|
|
|
|
92,969
|
|
|
|
110,715
|
|
|||||
Gains from sale or insurance recovery of property and equipment
|
|
(5,175)
|
|
|
|
(4,973)
|
|
|
|
(95,081)
|
|
|
|
(57,244)
|
|
|
|
(12,308)
|
|
|||||
Write-offs of property and equipment
|
|
4,733
|
|
|
|
4,167
|
|
|
|
8,528
|
|
|
|
5,776
|
|
|
|
6,038
|
|
|||||
Impairment of long-lived assets
|
|
8,790
|
|
|
|
18,950
|
|
|
|
17,564
|
|
|
|
7,697
|
|
|
|
12,343
|
|
|||||
Impairment of goodwill
|
|
273
|
|
|
|
167
|
|
|
|
200
|
|
|
|
5,045
|
|
|
|
679
|
|
|||||
Stock-based compensation related to the special awards in connection with the initial public offering under the 2011 Plan
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
210
|
|
|||||
Reorganization and optimization plan
|
|
—
|
|
|
|
11,003
|
|
|
|
—
|
|
|
|
5,341
|
|
|
|
18,346
|
|
|||||
2008 Long-Term Incentive Plan incremental compensation from modification
|
|
—
|
|
|
|
(575)
|
|
|
|
1,409
|
|
|
|
281
|
|
|
|
741
|
|
|||||
Adjusted EBITDA
|
|
291,775
|
|
|
|
257,997
|
|
|
|
304,937
|
|
|
|
238,445
|
|
|
|
230,171
|
|
•
|
inflow related to transactions carried out in the Brazilian financial and capital markets, including investments in our common shares by investors which register their investment under Resolution No. 4,373;
|
•
|
outflow related to the return of the investment mentioned under the first bulleted item above; and
|
•
|
outflow related to the payment of dividends and interest on shareholders’ equity in connection with the investment mentioned under the first bulleted item above.
|
•
|
creating liens;
|
•
|
paying dividends;
|
•
|
maintaining certain leverage ratios;
|
•
|
entering into sale and lease-back transactions; and
|
•
|
consolidating, merging or transferring assets.
|
•
|
governmental regulations applicable to food services operations;
|
•
|
changes in social, political and economic conditions;
|
•
|
transportation delays;
|
•
|
power, water and other utility shutdowns or shortages;
|
•
|
limitations on foreign investment;
|
•
|
restrictions on currency convertibility and volatility of foreign exchange markets;
|
•
|
inflation;
|
•
|
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 was obtained were not contrary to public policy.
|
|
|
For the Years Ended December 31,
|
||||||||||||||||||
|
|
2019
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
||||||||||
|
|
(in thousands of U.S. dollars)
|
||||||||||||||||||
Total Revenues
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Brazil
|
|
$
|
1,385,566
|
|
|
$
|
1,345,453
|
|
|
$
|
1,496,573
|
|
|
$
|
1,333,237
|
|
|
$
|
1,361,989
|
|
Caribbean division(1)
|
|
399,251
|
|
|
483,743
|
|
|
474,822
|
|
|
409,671
|
|
|
398,144
|
|
|||||
NOLAD
|
|
431,266
|
|
|
406,848
|
|
|
386,874
|
|
|
363,965
|
|
|
367,364
|
|
|||||
SLAD
|
|
742,994
|
|
|
845,527
|
|
|
961,256
|
|
|
821,757
|
|
|
925,243
|
|
|||||
Total
|
|
2,959,077
|
|
|
3,081,571
|
|
|
3,319,525
|
|
|
2,928,630
|
|
|
3,052,740
|
|
|
(1)
|
Currency devaluations in Venezuela have had a significant effect on our income statements and have impacted the comparability of our income statements. See “Item 5. Operating and Financial Review and Prospects—A. Operating Results—Foreign Currency Translation—Venezuela.”
|
|
|
|
Freestanding
|
In-store
|
|
|
|
|
Mall Store
|
Food Court
|
|
|
|
Network of McCafé Locations
|
Network of Dessert Centers
|
258 total McCafé locations
|
3,326 total Dessert Centers
|
|
|
|
|
|
Ownership
|
Store Type(1)
|
Real Property(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
|
612
|
0
|
411
|
0
|
1,023
|
462
|
350
|
92
|
119
|
2,000
|
81
|
108
|
915
|
Caribbean Division
|
251
|
0
|
84
|
1
|
336
|
224
|
21
|
36
|
55
|
311
|
36
|
128
|
207
|
NOLAD
|
364
|
0
|
156
|
10
|
530
|
273
|
146
|
51
|
59
|
626
|
13
|
160
|
360
|
SLAD
|
338
|
15
|
51
|
0
|
404
|
124
|
77
|
115
|
87
|
389
|
128
|
98
|
306
|
Total
|
1,565
|
15
|
702
|
11
|
2,293
|
1,083
|
594
|
294
|
320
|
3,326
|
258
|
494
|
1,788
|
|
(1)
|
Non-traditional satellite restaurants are not included in these figures.
|
(2)
|
Developmental licenses and mobile stores are not included in these figures.
|
|
(1)
|
Includes class A shares and class B shares beneficially owned by Mr. Woods Staton, our Executive Chairman. Los Laureles Ltd. is beneficially owned by Mr. Woods Staton. See “Item 7. Major Shareholders and Related Party Transactions—A. Major Shareholders—Los Laureles Ltd.”
|
(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.
|
|
|
Sales
|
|
Sales growth
|
|
Sales growth in
constant currency
|
|
Comparable sales growth
|
||||||||||||||||||||||||
|
|
For the Years Ended
December 31,
|
|
For the Years Ended December 31,
|
|
For the Years Ended December 31,
|
|
For the Years Ended December 31,
|
||||||||||||||||||||||||
|
|
2019
|
|
2018
|
|
2017
|
|
2019(1)
|
|
2018(3)
|
|
2019(1)
|
|
2018(3)
|
|
2019(2)
|
|
2018(4)
|
||||||||||||||
|
|
(in thousands of U.S. dollars, except percentages)
|
||||||||||||||||||||||||||||||
Sales by Company-operated restaurants
|
|
2,812,287
|
|
|
2,932,609
|
|
|
3,162,256
|
|
|
(4.1)
|
%
|
|
(7.3)
|
%
|
|
2,606.9
|
%
|
|
1,244.5
|
%
|
|
2,649.4
|
%
|
|
1,270.4
|
%
|
|
||||
Franchised
sales(5)
|
|
1,189,533
|
|
|
1,200,112
|
|
|
1,250,606
|
|
|
(0.9)
|
%
|
|
(4.0)
|
%
|
|
6,118.5
|
%
|
|
3,100.2
|
%
|
|
6,040.1
|
%
|
|
2,983.0
|
%
|
|
||||
Systemwide sales
|
|
4,001,820
|
|
|
4,132,721
|
|
|
4,412,862
|
|
|
(3.2)
|
%
|
|
(6.3)
|
%
|
|
3,626.7
|
%
|
|
1,770.4
|
%
|
|
3,654.4
|
%
|
|
1,778.1
|
%
|
|
|
(1)
|
In nominal terms, sales decreased during 2019 due to the negative impact of the depreciation of currencies mainly in Venezuela, Argentina and Brazil against the U.S. dollar. This was partially offset by comparable sales growth of 3,654.4%, as a result of hyperinflation in Venezuela. We had 1,580 Company-operated restaurants and 713 franchised restaurants as of December 31, 2019, compared to 1,540 Company-operated restaurants and 683 franchised restaurants as of December 31, 2018.
|
(2)
|
Our comparable sales growth on a systemwide basis in 2019 was driven by the increase in average check, which resulted mainly from price increases in Venezuela and Argentina (driven by the hyperinflation), and from increased traffic at our restaurants, especially in Brazil.
|
(3)
|
In nominal terms, sales decreased during 2018 due to the negative impact of the depreciation of currencies mainly in Venezuela, Argentina and Brazil against the U.S. dollar. This was partially offset by comparable sales growth of 1,778.1%, as a result of hyperinflation in Venezuela. We had 1,540 Company-operated restaurants and 683 franchised restaurants as of December 31, 2018, compared to 1,546 Company-operated restaurants and 642 franchised restaurants as of December 31, 2017.
|
(4)
|
Our comparable sales growth on a systemwide basis in 2018 was driven by the increase in average check, which resulted mainly from price increases in Venezuela (driven by the hyperinflation) and in Argentina and from increased traffic at our restaurants.
|
(5)
|
Franchised sales correspond to sales generated by franchised restaurants, which we do not collect. Revenues from franchised restaurants primarily consist of rental income.
|
|
|
Sales
|
|
Sales growth
|
|
Sales growth in
constant currency
|
|
Comparable sales growth
|
||||||||||||||||||||||||||||||||
|
|
For the Years Ended
December 31,
|
|
For the Years Ended December 31,
|
|
For the Years Ended December 31,
|
|
For the Years Ended December 31,
|
||||||||||||||||||||||||||||||||
|
|
2019
|
|
2018
|
|
2017
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||||||||||||||||
|
|
(in thousands of U.S. dollars, except percentages)
|
||||||||||||||||||||||||||||||||||||||
Sales by Company-operated restaurants:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||
Brazil
|
|
$
|
1,283,005
|
|
|
$
|
1,251,458
|
|
|
$
|
1,396,411
|
|
|
2.5
|
%
|
|
(10.4)
|
%
|
|
11.1
|
%
|
|
2.0
|
%
|
|
9.5
|
%
|
|
1.1
|
%
|
||||||||||
Caribbean division
|
|
390,589
|
|
|
467,352
|
|
|
457,033
|
|
|
(16.4)
|
%
|
|
2.3
|
%
|
|
16,275.6
|
%
|
|
8,559.0
|
%
|
|
16,506.1
|
%
|
|
8,719.4
|
%
|
|||||||||||||
NOLAD
|
|
410,601
|
|
|
388,233
|
|
|
370,457
|
|
|
5.8
|
%
|
|
4.8
|
%
|
|
6.3
|
%
|
|
6.3
|
%
|
|
5.3
|
%
|
|
6.4
|
%
|
|||||||||||||
SLAD
|
|
728,092
|
|
|
825,566
|
|
|
938,355
|
|
|
(11.8)
|
%
|
|
(12.0)
|
%
|
|
27.0
|
%
|
|
19.7
|
%
|
|
25.1
|
%
|
|
19.6
|
%
|
|||||||||||||
Total Sales by Company-operated restaurants
|
|
2,812,287
|
|
|
2,932,609
|
|
|
3,162,256
|
|
|
(4.1)
|
%
|
|
(7.3)
|
%
|
|
2,606.9
|
%
|
|
1,244.5
|
%
|
|
2,649.4
|
%
|
|
1,270.4
|
%
|
|||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||
Franchised-sales:(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||
Brazil
|
|
834,653
|
|
|
773,908
|
|
|
815,184
|
|
|
7.8
|
%
|
|
(5.1)
|
%
|
|
16.8
|
%
|
|
8.1
|
%
|
|
|
9.8
|
%
|
|
|
2.3
|
%
|
|||||||||||
Caribbean division
|
|
64,813
|
|
|
120,702
|
|
|
127,599
|
|
|
(46.3)
|
%
|
|
(5.4)
|
%
|
|
60,683.6
|
%
|
|
30,277.9
|
%
|
|
|
61,561.5
|
%
|
|
|
30,716.2
|
%
|
|||||||||||
NOLAD
|
|
171,672
|
|
|
159,180
|
|
|
142,657
|
|
|
7.8
|
%
|
|
11.6
|
%
|
|
7.9
|
%
|
|
13.5
|
%
|
|
|
4.3
|
%
|
|
|
6.8
|
%
|
|||||||||||
SLAD
|
|
118,395
|
|
|
146,322
|
|
|
165,166
|
|
|
(19.1)
|
%
|
|
(11.4)
|
%
|
|
26.9
|
%
|
|
31.3
|
%
|
|
|
26.4
|
%
|
|
|
22.3
|
%
|
|||||||||||
Total Franchised sales
|
|
1,189,533
|
|
|
1,200,112
|
|
|
1,250,606
|
|
|
(0.9)
|
%
|
|
(4.0)
|
%
|
|
6,118.5
|
%
|
|
3,100.2
|
%
|
|
6,040.1
|
%
|
|
2,983.0
|
%
|
|||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Systemwide sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Brazil
|
|
2,117,658
|
|
|
2,025,366
|
|
|
2,211,595
|
|
|
4.6
|
%
|
|
(8.4)
|
%
|
|
13.3
|
%
|
|
4.3
|
%
|
|
|
9.7
|
%
|
|
|
1.6
|
%
|
|||||||||||
Caribbean division
|
|
455,403
|
|
|
588,054
|
|
|
584,632
|
|
|
(22.6)
|
%
|
|
0.6
|
%
|
|
25,390.7
|
%
|
|
13,299.2
|
%
|
|
|
25,753.0
|
%
|
|
|
13,557.8
|
%
|
|||||||||||
NOLAD
|
|
582,273
|
|
|
547,414
|
|
|
513,114
|
|
|
6.4
|
%
|
|
6.7
|
%
|
|
6.8
|
%
|
|
8.3
|
%
|
|
|
5.0
|
%
|
|
|
6.5
|
%
|
|||||||||||
SLAD
|
|
846,486
|
|
|
971,887
|
|
|
1,103,521
|
|
|
(12.9)
|
%
|
|
(11.9)
|
%
|
|
27.0
|
%
|
|
21.4
|
%
|
|
|
25.3
|
%
|
|
|
20.1
|
%
|
|||||||||||
Total Systemwide sales
|
|
4,001,820
|
|
|
4,132,721
|
|
|
4,412,862
|
|
|
(3.2)
|
%
|
|
(6.3)
|
%
|
|
3,626.7
|
%
|
|
1,770.4
|
%
|
|
3,654.4
|
%
|
|
1,778.1
|
%
|
|
|
Sales
|
|
Number of restaurants
|
|
Average restaurant sales
|
||||||||||||||||||||||||||||||||
|
|
For the Years Ended December 31,
|
|
For the Years Ended December 31,
|
|
For the Years Ended December 31,
|
||||||||||||||||||||||||||||||||
|
|
2019
|
|
2018
|
|
2017
|
|
2019
|
|
2018
|
|
2017
|
|
2016
|
|
2019(1)
|
|
2018(2)
|
|
2017
|
||||||||||||||||||
|
|
(in thousands of U.S. dollars, except for number of restaurants)
|
||||||||||||||||||||||||||||||||||||
Sales by Company-operated restaurants
|
|
$
|
2,812,287
|
|
|
$
|
2,932,609
|
|
|
$
|
3,162,256
|
|
|
1,580
|
|
|
1,540
|
|
|
1,546
|
|
|
1,553
|
|
|
$
|
1,780
|
|
$
|
1,901
|
|
$
|
2,041
|
|||||
Franchised sales(3)
|
|
$
|
1,189,533
|
|
|
$
|
1,200,112
|
|
|
$
|
1,250,606
|
|
|
713
|
|
|
683
|
|
|
642
|
|
|
603
|
|
|
$
|
1,668
|
|
$
|
1,811
|
|
$
|
2,009
|
|||||
Systemwide sales
|
|
$
|
4,001,820
|
|
|
$
|
4,132,721
|
|
|
$
|
4,412,862
|
|
|
2,293
|
|
|
2,223
|
|
|
2,188
|
|
|
2,156
|
|
|
$
|
1,745
|
|
$
|
1,874
|
|
$
|
2,032
|
|
(1)
|
Our ARS decreased in 2019 due to the negative impact of the depreciation of currencies, mainly in Venezuela, Argentina and Brazil, against the U.S. dollar. This was partially offset by comparable sales growth of 3,654.4%, mainly driven by Venezuela´s hyperinflation.
|
(2)
|
Our ARS decreased in 2018 due to the negative impact of the depreciation of currencies, mainly in Venezuela, Argentina and Brazil, against the U.S. dollar. This was partially offset by comparable sales growth of 1,778.1%, mainly driven by Venezuela’s hyperinflation.
|
(3)
|
Franchised sales correspond to sales generated by franchised restaurants, which we do not collect. Revenues from franchised restaurants primarily derive from rental income.
|
|
|
For the Years Ended December 31,
|
|
%
Change
|
|||||||
|
|
2019
|
|
2018
|
|
||||||
|
|
(in thousands of U.S. dollars)
|
|
|
|||||||
Sales by Company-operated restaurants
|
|
$
|
2,812,287
|
|
|
$
|
2,932,609
|
|
|
(4.1)
|
%
|
Revenues from franchised restaurants
|
|
$
|
146,790
|
|
|
$
|
148,962
|
|
|
(1.5)
|
%
|
Total revenues
|
|
$
|
2,959,077
|
|
|
$
|
3,081,571
|
|
|
(4.0)
|
%
|
Company-operated restaurant expenses:
|
|
|
|
|
|
|
|||||
Food and paper
|
|
$
|
(1,007,584)
|
|
|
$
|
(1,030,499)
|
|
|
(2.2)
|
%
|
Payroll and employee benefits
|
|
$
|
(567,653)
|
|
|
$
|
(607,793)
|
|
|
(6.6)
|
%
|
Occupancy and other operating expenses
|
|
$
|
(799,633)
|
|
|
$
|
(803,539)
|
|
|
(0.5)
|
%
|
Royalty fees
|
|
$
|
(155,388)
|
|
|
$
|
(157,886)
|
|
|
(1.6)
|
%
|
Franchised restaurants – occupancy expenses
|
|
$
|
(61,278)
|
|
|
$
|
(67,927)
|
|
|
(9.8)
|
%
|
General and administrative expenses
|
|
$
|
(212,515)
|
|
|
$
|
(229,324)
|
|
|
(7.3)
|
%
|
Other operating income (expenses), net
|
|
$
|
4,910
|
|
|
$
|
(61,145)
|
|
|
(108.0)
|
%
|
Total operating costs and expenses
|
|
$
|
(2,799,141)
|
|
|
$
|
(2,958,113)
|
|
|
(5.4)
|
%
|
Operating income
|
|
$
|
159,936
|
|
|
$
|
123,458
|
|
|
29.5
|
%
|
Net interest expense
|
|
$
|
(52,079)
|
|
|
$
|
(52,868)
|
|
|
(1.5)
|
%
|
Gain (loss) from derivative instruments
|
|
$
|
439
|
|
|
$
|
(565)
|
|
|
(177.7)
|
%
|
Foreign currency exchange results
|
|
$
|
12,754
|
|
|
$
|
14,874
|
|
|
(14.3)
|
%
|
Other non-operating (expenses) income, net
|
|
$
|
(2,097)
|
|
|
$
|
270
|
|
|
(876.7)
|
%
|
Income before income taxes
|
|
$
|
118,953
|
|
|
$
|
85,169
|
|
|
39.7
|
%
|
Income tax expense
|
|
$
|
(38,837)
|
|
|
$
|
(48,136)
|
|
|
(19.3)
|
%
|
Net income
|
|
$
|
80,116
|
|
|
$
|
37,033
|
|
|
116.3
|
%
|
Less: Net income attributable to non-controlling interests
|
|
$
|
(220)
|
|
|
$
|
(186)
|
|
|
18.3
|
%
|
Net income attributable to Arcos Dorados Holdings Inc
|
|
$
|
79,896
|
|
|
$
|
36,847
|
|
|
116.8
|
%
|
Systemwide Restaurants
|
|
For the Years Ended
December 31,
|
||||
|
|
2019
|
|
2018
|
||
Systemwide restaurants at beginning of period
|
|
2,223
|
|
|
2,188
|
|
Restaurant openings
|
|
90
|
|
|
70
|
|
Restaurant closings
|
|
(20)
|
|
|
(35)
|
|
Systemwide restaurants at end of period
|
|
2,293
|
|
|
2,223
|
|
Company-Operated Restaurants
|
|
For the Years Ended
December 31,
|
||||
|
|
2019
|
|
2018
|
||
Company-operated restaurants at beginning of period
|
|
1,540
|
|
|
1,546
|
|
Restaurant openings
|
|
65
|
|
|
42
|
|
Restaurant closings
|
|
(17)
|
|
|
(28)
|
|
Net conversions of franchised restaurants to Company-operated restaurants
|
|
(8)
|
|
|
(20)
|
|
Company-operated restaurants at end of period
|
|
1,580
|
|
|
1,540
|
|
Franchised Restaurants
|
|
For the Years Ended
December 31,
|
||||
|
|
2019
|
|
2018
|
||
Franchised restaurants at beginning of period
|
|
683
|
|
|
642
|
|
Restaurant openings
|
|
25
|
|
|
28
|
|
Restaurant closings
|
|
(3)
|
|
|
(7)
|
|
Net conversions of franchised restaurants to Company-operated restaurants
|
|
8
|
|
|
20
|
|
Franchised restaurants at end of period
|
|
713
|
|
|
683
|
|
|
|
For the Years Ended
December 31,
|
|
% Change
|
|||||||
|
|
2019
|
|
2018
|
|
||||||
|
|
(in thousands of U.S. dollars)
|
|
|
|||||||
Sales by Company-operated restaurants
|
|
|
|
|
|
|
|||||
Brazil
|
|
$
|
1,283,005
|
|
|
$
|
1,251,458
|
|
|
2.5
|
%
|
Caribbean division
|
|
$
|
390,589
|
|
|
$
|
467,352
|
|
|
(16.4)
|
%
|
NOLAD
|
|
$
|
410,601
|
|
|
$
|
388,233
|
|
|
5.8
|
%
|
SLAD
|
|
$
|
728,092
|
|
|
$
|
825,566
|
|
|
(11.8)
|
%
|
Total
|
|
$
|
2,812,287
|
|
|
$
|
2,932,609
|
|
|
(4.1)
|
%
|
Revenues from franchised restaurants
|
|
|
|
|
|
|
|||||
Brazil
|
|
$
|
102,561
|
|
|
$
|
93,995
|
|
|
9.1
|
%
|
Caribbean division
|
|
$
|
8,662
|
|
|
$
|
16,391
|
|
|
(47.2)
|
%
|
NOLAD
|
|
$
|
20,665
|
|
|
$
|
18,615
|
|
|
11.0
|
%
|
SLAD
|
|
$
|
14,902
|
|
|
$
|
19,961
|
|
|
(25.3)
|
%
|
Total
|
|
$
|
146,790
|
|
|
$
|
148,962
|
|
|
(1.5)
|
%
|
Total revenues
|
|
|
|
|
|
|
|||||
Brazil
|
|
$
|
1,385,566
|
|
|
$
|
1,345,453
|
|
|
3.0
|
%
|
Caribbean division
|
|
$
|
399,251
|
|
|
$
|
483,743
|
|
|
(17.5)
|
%
|
NOLAD
|
|
$
|
431,266
|
|
|
$
|
406,848
|
|
|
6.0
|
%
|
SLAD
|
|
$
|
742,994
|
|
|
$
|
845,527
|
|
|
(12.1)
|
%
|
Total
|
|
$
|
2,959,077
|
|
|
$
|
3,081,571
|
|
|
(4.0)
|
%
|
|
|
For the Years Ended
December 31,
|
|
% Change
|
|||||||
|
|
2019
|
|
2018
|
|
||||||
|
|
(in thousands of U.S. dollars)
|
|
|
|||||||
Brazil
|
|
$
|
164,342
|
|
|
$
|
159,511
|
|
|
3.0
|
%
|
Caribbean division
|
|
$
|
(1,101)
|
|
|
$
|
(49,567)
|
|
|
97.8
|
%
|
NOLAD
|
|
$
|
16,539
|
|
|
$
|
7,726
|
|
|
114.1
|
%
|
SLAD
|
|
$
|
42,410
|
|
|
$
|
53,777
|
|
|
(21.1)
|
%
|
Corporate and other and purchase price allocation
|
|
$
|
(62,254)
|
|
|
$
|
(47,989)
|
|
|
29.7
|
%
|
Total
|
|
$
|
159,936
|
|
|
$
|
123,458
|
|
|
29.5
|
%
|
•
|
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,
|
||||||||||
|
|
2019
|
|
2018
|
|
2017
|
||||||
|
|
(in thousands of U.S. dollars)
|
||||||||||
Net cash provided by operating activities
|
|
$
|
223,481
|
|
|
$
|
179,731
|
|
|
$
|
255,170
|
|
Net cash used in investing activities
|
|
(260,991)
|
|
|
(163,784)
|
|
|
(124,480)
|
|
|||
Net cash used in financing activities
|
|
(29,632)
|
|
|
(73,442)
|
|
|
(3,353)
|
|
|||
Effect of exchange rate changes on cash and cash equivalents
|
|
(8,260)
|
|
|
(53,714)
|
|
|
(13,649)
|
|
|||
(Decrease) increase in cash and cash equivalents
|
|
(75,402)
|
|
|
(111,209)
|
|
|
113,688
|
|
|
|
For the Years Ended December 31,
|
||||||||||
|
|
2019
|
|
2018
|
|
2017
|
||||||
|
|
(in thousands of U.S. dollars)
|
||||||||||
Net income attributable to Arcos Dorados Holdings Inc.
|
|
$
|
79,896
|
|
|
$
|
36,847
|
|
|
$
|
129,166
|
|
Non-cash charges and credits
|
|
117,498
|
|
|
121,448
|
|
|
60,926
|
|
|||
Changes in assets and liabilities
|
|
26,087
|
|
|
21,436
|
|
|
65,078
|
|
|||
Net cash provided by operating activities
|
|
223,481
|
|
|
179,731
|
|
|
255,170
|
|
|
|
For the Years Ended December 31,
|
||||||||||||
|
|
2019
|
|
2018
|
|
2017
|
||||||||
|
|
(in thousands of U.S. dollars)
|
||||||||||||
Property and equipment expenditures
|
|
$
|
(265,235)
|
|
|
|
$
|
(197,041)
|
|
|
|
$
|
(174,766)
|
|
Purchases of restaurant businesses paid at acquisition date
|
|
(2,658)
|
|
|
|
—
|
|
|
|
(870)
|
|
|||
Proceeds from sales of property and equipment and related advances
|
|
3,340
|
|
|
|
2,891
|
|
|
|
61,983
|
|
|||
Proceeds from sales of restaurant businesses and related advances
|
|
4,818
|
|
|
|
10,158
|
|
|
|
10,407
|
|
|||
Recovery (acquisitions) of short-term investments
|
|
—
|
|
|
|
19,588
|
|
|
|
(19,588)
|
|
|||
Others, net
|
|
(1,256)
|
|
|
|
620
|
|
|
|
(1,646)
|
|
|||
Net cash used in investing activities
|
|
(260,991)
|
|
|
|
(163,784)
|
|
|
|
(124,480)
|
|
|
|
For the Years Ended December 31,
|
||||||||||
|
|
2019
|
|
2018
|
|
2017
|
||||||
|
|
(in thousands of U.S. dollars)
|
||||||||||
New restaurants
|
|
$
|
88,427
|
|
|
$
|
55,982
|
|
|
$
|
41,557
|
|
Existing restaurants
|
|
149,681
|
|
|
107,202
|
|
|
105,396
|
|
|||
Other(1)
|
|
27,127
|
|
|
33,857
|
|
|
27,813
|
|
|||
Total property and equipment expenditures
|
|
265,235
|
|
|
197,041
|
|
|
174,766
|
|
|
(1)
|
Primarily corporate equipment and other office expenditures.
|
|
|
For the Years Ended December 31,
|
|||||||||||||
|
|
2019
|
|
2018
|
|
2017
|
|||||||||
|
|
(in thousands of U.S. dollars)
|
|||||||||||||
Repayment of 2016 Secured Loan Agreement
|
|
$
|
—
|
|
|
|
$
|
—
|
|
|
|
$
|
(169,511)
|
|
|
Dividend payments to Arcos Dorados Holdings Inc. shareholders
|
|
(22,425)
|
|
|
|
(20,937)
|
|
|
|
—
|
|
|
|||
Net payment of derivative instruments
|
|
—
|
|
|
|
—
|
|
|
|
(40,822)
|
|
|
|||
Purchase of 2023 Notes
|
|
—
|
|
|
|
—
|
|
|
|
(48,885)
|
|
|
|||
Issuance of 2027 Notes
|
|
—
|
|
|
|
—
|
|
|
|
265,000
|
|
|
|||
Treasury stock purchases
|
|
(13,965)
|
|
|
|
(46,035)
|
|
|
|
—
|
|
|
|||
Net short-term borrowings
|
|
13,159
|
|
|
|
—
|
|
|
|
—
|
|
|
|||
Other financing activities
|
|
(6,401)
|
|
|
|
(6,470)
|
|
|
|
(9,135)
|
|
|
|||
Net cash used in financing activities
|
|
(29,632)
|
|
|
|
(73,442)
|
|
|
|
(3,353)
|
|
|
•
|
Social upward mobility in Latin America and the Caribbean: Historically, our sales have benefited, and we expect to continue to benefit, from our Territories’ population size, younger age profile and improving socio-economic conditions when compared to more developed markets. 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. While consumer behavior will continue to be cyclical and dependent on macroeconomic activity, we expect to continue to benefit from this trend in the long term.
|
•
|
Nutrition & Healthier products: Growing interest for products that are perceived to be healthy. Consumers are looking for more information regarding nutritional facts and demanding healthier products.
|
•
|
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 helped us remain relevant with our customers.
|
•
|
Increased competition in some markets: The popularity of the QSR concept in Latin America has attracted new competitors. Even though we have been able to protect our market share in many of 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 partially 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 labor costs, food and paper costs, occupancy and other operating expenses and general administrative expenses.
|
•
|
Increased volatility of foreign exchange rates and impact of currency controls: Our results of operations have been impacted by increased volatility in foreign exchange rates in many of the Territories, particularly the significant devaluation of local currencies against the U.S. dollar. 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.
|
•
|
Social unrest: Towards the end of 2019, there was a significant uptick in social unrest in several countries in which we operate. There were large social protests against inequality in many of these countries, and certain of our properties were damaged. Although social unrest had generally calmed down by the end of 2019 and most of our losses were covered by our insurance, any continuation of or increase in social unrest in 2020 could lead to further damage to our properties, a decline in sales or otherwise negatively impact our results.
|
•
|
Environmental Consciousness: Over the last few years, our customers have demonstrated a growing interest in sustainable practices, including as it relates to sourcing our ingredients and paper and packaging costs. In particular, movements such as the anti-plastic movement have gained momentum in recent years and caused us to make changes in the sourcing of our raw materials. We may need to make further changes in our supply chain and food and paper costs in the future in order to adequately respond to our customers’ focus on sustainability.
|
|
|
Payment Due by Period
|
|||||||||||||||||||||||||||
Contractual Obligations
|
|
Total
|
|
2020
|
|
2021
|
|
2022
|
|
2023
|
|
2024
|
|
Thereafter
|
|||||||||||||||
|
|
(in thousands of U.S. dollars)
|
|||||||||||||||||||||||||||
Finance lease obligations(1)
|
|
$
|
9,383
|
|
|
$
|
864
|
|
|
$
|
787
|
|
|
$
|
919
|
|
|
$
|
427
|
|
|
$
|
427
|
|
|
$
|
5,959
|
|
|
Operating lease obligations
|
|
$
|
1,660,260
|
|
|
149,369
|
|
|
140,667
|
|
|
133,459
|
|
|
128,213
|
|
|
124,138
|
|
|
984,414
|
|
|
||||||
Contractual purchase obligations(2)
|
|
$
|
108,821
|
|
|
61,057
|
|
|
19,728
|
|
|
14,958
|
|
|
8,406
|
|
|
2,336
|
|
|
2,336
|
|
|
||||||
2023 and 2027 notes(1) (3)
|
|
$
|
822,076
|
|
|
38,629
|
|
|
38,629
|
|
|
38,629
|
|
|
386,698
|
|
|
15,569
|
|
|
303,922
|
|
|
||||||
Other long-term borrowings(1)
|
|
$
|
16,384
|
|
|
3,930
|
|
|
3,653
|
|
|
3,390
|
|
|
3,126
|
|
|
2,285
|
|
|
—
|
|
|
||||||
Derivative instruments
|
|
$
|
(44,321)
|
|
|
9,908
|
|
|
8,834
|
|
|
7,663
|
|
|
(46,442)
|
|
|
1,278
|
|
|
(25,562)
|
|
|
||||||
Total
|
|
$
|
2,572,603
|
|
|
$
|
263,757
|
|
|
$
|
212,298
|
|
|
$
|
199,018
|
|
|
$
|
480,428
|
|
|
$
|
146,033
|
|
|
$
|
1,271,069
|
|
|
|
(1)
|
Includes interest payments.
|
(2)
|
Includes automatic annual renewals, which contains only enforceable and legally binding unconditional obligations corresponding to prevailing agreements without considering future undefined renewals when the agreement is cancellable by us. This type of purchase obligation represents $21.0 million of contractual obligations for 2020 only.
|
(3)
|
Does not include the impact of the deferred financing costs and the net discount related to the issue of the 2023 notes.
|
•
|
Mr. Woods Staton, Mr. Gutiérrez, Mr. Alonso and Mr. Francisco Staton are Class I directors, whose term will expire at the annual meeting of shareholders to be held in 2021;
|
•
|
Mr. Hernández-Artigas,Mrs. Franqui, Mr. Rabach and Mrs. Presz Palmaka De Luca are Class II directors, whose term will expire at the annual meeting of shareholders to be held in 2022; and
|
•
|
Mr. Chu, Mr. Vélez and Mr. Fernández are Class III directors, whose term will expire at the annual meeting of shareholders to be held in 2020.
|
|
(1)
|
Mr. Rabach was appointed as, and succeeded to the role of, Chief Executive Officer effective July 1, 2019. Mr. Alonso stepped down from his role as Chief Executive Officer effective as of the same date and remained a member of the Board of Directors.
|
Name
|
Position
|
Initial Year of Appointment
|
At Arcos Dorados Since
|
Marcelo Rabach
|
Chief Executive Officer
|
2019
|
1990
|
Luis Raganato
|
Chief Operating Officer
|
2019
|
1991
|
Mariano Tannenbaum
|
Chief Financial Officer
|
2017
|
2008
|
Juan David Bastidas
|
Chief Legal Counsel
|
2010
|
2010
|
Paulo Camargo
|
Divisional President—Brazil
|
2015
|
2011
|
Alejandro Yapur
|
Divisional President—SLAD
|
2013
|
1986
|
Rogério Barreira
|
Divisional President—NOLAD
|
2015
|
1984
|
Francisco Staton
|
Divisional President—Caribbean
|
2019
|
2013
|
Sebastian Magnasco
|
Vice President of Development
|
2007
|
1994
|
Santiago Blanco
|
Chief Marketing and Digital Officer
|
2019
|
2019
|
Diego Benenzon
|
Vice President of Human Resources
|
2014
|
2009
|
José Valledor Rojo
|
Vice President of Supply Chain
|
2015
|
1990
|
Marlene Fernandez del Granado
|
Vice President of Government Relations
|
2011
|
2009
|
David Grinberg
|
Vice President of Corporate Communications
|
2018
|
2010
|
Marco Cordón
|
Chief Transformation Officer
|
2019
|
2019
|
Daniel Schleiniger
|
Vice President of Investor Relations
|
2020
|
2020*
|
|
Date of the grant
|
Phantom RSU, Type 1
|
Phantom RSU, Type 2
|
May 10, 2019
|
454,365
|
1,207,455
|
•
|
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;
|
•
|
evaluating the structure of our board of directors;
|
•
|
nominating candidates to executive positions and to the board of directors; and
|
•
|
reporting to the board periodically.
|
Division
|
Crew
|
Restaurant Managers
|
Professional Staff
|
Total
|
Brazil
|
26,980
|
5,681
|
746
|
33,407
|
Caribbean division
|
8,189
|
1,430
|
418
|
10,037
|
NOLAD
|
8,186
|
2,099
|
479
|
10,764
|
SLAD
|
23,058
|
2,820
|
469
|
26,347
|
Corporate and other
|
-
|
-
|
300
|
300
|
Total
|
66,413
|
12,030
|
2,412
|
80,855
|
Shareholder
|
Class A Shares
|
Percentage of Outstanding Class A Shares(1)
|
Class B Shares
|
Percentage of Outstanding Class B Shares(1)
|
Total Economic Interest(1)
|
Total Voting Interest(1) (2)
|
||||||
Los Laureles Ltd.(3)(4)
|
—
|
|
—
|
|
80,000,000
|
|
100.00
|
%
|
39.20
|
%
|
76.33
|
%
|
Woods Staton(4)
|
828,955
|
|
0.67
|
%
|
—
|
|
—
|
|
0.41
|
%
|
0.16
|
%
|
Sergio Alonso
|
*
|
|
*
|
|
—
|
|
—
|
|
*
|
|
*
|
|
Annette Franqui
|
*
|
|
*
|
|
—
|
|
—
|
|
*
|
|
*
|
|
Carlos Hernández-Artigas
|
*
|
|
*
|
|
—
|
|
—
|
|
*
|
|
*
|
|
Juan David Bastidas
|
*
|
|
*
|
|
—
|
|
—
|
|
*
|
|
*
|
|
José Valledor Rojo
|
*
|
|
*
|
|
—
|
|
—
|
|
*
|
|
*
|
|
José Fernandez
|
*
|
|
*
|
|
—
|
|
—
|
|
*
|
|
*
|
|
Marcelo Rabach
|
*
|
|
*
|
|
—
|
|
—
|
|
*
|
|
*
|
|
Mariano Tannenbaum
|
*
|
|
*
|
|
—
|
|
—
|
|
*
|
|
*
|
|
Sebastian Magnasco
|
*
|
|
*
|
|
—
|
|
—
|
|
*
|
|
*
|
|
Diego Benenzon
|
*
|
|
*
|
|
—
|
|
—
|
|
*
|
|
*
|
|
Marlene Fernandez
|
*
|
|
*
|
|
—
|
|
—
|
|
*
|
|
*
|
|
Luis Raganato
|
*
|
|
*
|
|
—
|
|
—
|
|
*
|
|
*
|
|
Rogério Barreira
|
*
|
|
*
|
|
—
|
|
—
|
|
*
|
|
*
|
|
Alejandro Yapur
|
*
|
|
*
|
|
—
|
|
—
|
|
*
|
|
*
|
|
Paulo Camargo
|
*
|
|
*
|
|
—
|
|
—
|
|
*
|
|
*
|
|
Dan Gertsacov(5)
|
*
|
|
*
|
|
—
|
|
—
|
|
*
|
|
*
|
|
Santiago Blanco
|
*
|
|
*
|
|
—
|
|
—
|
|
*
|
|
*
|
|
David Grinberg
|
*
|
|
*
|
|
—
|
|
—
|
|
*
|
|
*
|
|
Francisco Staton
|
*
|
|
*
|
|
__
|
|
__
|
|
*
|
|
*
|
|
Marco Cordón
|
*
|
|
*
|
|
__
|
|
__
|
|
*
|
|
*
|
|
Daniel Schleiniger
|
*
|
|
*
|
|
__
|
|
__
|
|
*
|
|
*
|
|
|
*
|
Each of these directors and officers beneficially owns less than 1% of the total number of outstanding class A shares.
|
(1)
|
Percentages are based on 124,070,029 Class A shares issued and outstanding as of the date of this annual report and exclude 7,993,602 Class A shares issued and held in treasury.
|
(2)
|
Class A shares are entitled to one vote per share and class B shares are entitled to five votes per share.
|
(3)
|
Los Laureles Ltd. is beneficially owned by Mr. Woods Staton, our Executive Chairman. See “Item 7. Major Shareholders and Related Party Transactions—A. Major Shareholders—Los Laureles Ltd.”
|
(4)
|
In addition to the class B shares he beneficially owns through Los Laureles Ltd., Mr. Woods Staton beneficially owns 828,955 class A shares (includes 30,784 shares of common stock issuable upon exercise of stock options, 113,150 restricted share units that have vested or will vest within 60 days of this annual report and excludes 55,908 unvested restricted share units) directly, and indirectly through Chablais Investments S.A. (“Chablais”). Of these 828,955 class A shares, Chablais has pledged an aggregate of 684,971 shares for the benefit of JPMorgan Chase Bank, N.A., in connection with a financing transaction. On a combined basis, Mr. Woods Staton is the beneficial owner of an aggregate of 39.61% of the total economic interests of Arcos Dorados and 76.49% of its total voting interests. The address of Mr. Woods Staton is Mantua No. 6575 (esquina Potosí), Montevideo, Uruguay 11500. The address of Chablais is Level 1, Palm Grove House, Wickham’s Cay 1, Road Town, Tortola, BVI.
|
(5)
|
Resigned from his role effective March 1, 2019.
|
Shareholder
|
Class A Shares
|
% of
Outstanding Class A Shares |
Class B Shares(1)
|
% of
Outstanding Class B Shares(1) |
Total Economic Interest(1)
|
Total Voting Interest(1) (2)
|
||||||
Los Laureles Ltd(3)(4)
|
—
|
|
—
|
|
80,000,000
|
|
100.0
|
%
|
39.20
|
%
|
76.33
|
%
|
Woods Staton(4)
|
828,955
|
|
0.67
|
%
|
—
|
|
—
|
|
0.41
|
%
|
0.16
|
%
|
William H. Gates III(5)
|
11,641,400
|
|
9.38
|
%
|
—
|
|
—
|
|
5.70
|
%
|
2.22
|
%
|
Invesco Ltd.(6)
|
8,612,670
|
|
6.94
|
%
|
—
|
|
—
|
|
4.22
|
%
|
1.64
|
%
|
TIAA-CREF Investment Management, LLC (7)
|
11,838,125
|
|
9.54
|
%
|
—
|
|
—
|
|
5.80
|
%
|
2.26
|
%
|
Teachers Advisors, LLC (8)
|
8,722,405
|
|
7.03
|
%
|
—
|
|
—
|
|
4.27
|
%
|
1.66
|
%
|
International Value Advisers, LLC (9)
|
2,379,000
|
|
1.92
|
%
|
|
|
1.17
|
%
|
0.45
|
%
|
||
Public
|
80,047,474
|
|
64.52
|
%
|
—
|
|
—
|
|
39.23
|
%
|
15.27
|
%
|
Total(11)
|
124,070,029
|
|
100.00%(10)
|
|
80,000,000
|
|
100.00
|
%
|
100.00
|
%
|
100.00%(10)
|
|
|
(1)
|
Percentages are based on 124,070,029 Class A shares issued and outstanding as of the date of this annual report and exclude 7,993,602 Class A shares issued and held in treasury.
|
(2)
|
Class A shares are entitled to one vote per share and class B shares are entitled to five votes per share.
|
(3)
|
The address of Los Laureles Ltd. is 325 Waterfront Drive, Omar Hodge Building, 2nd Floor, Wickham’s Cay 1, Road Town, Tortola, British Virgin Islands. Los Laureles Ltd. is beneficially owned by Mr. Woods Staton, our Executive Chairman. 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.”
|
(4)
|
In addition to the class B shares he beneficially owns through Los Laureles Ltd., Mr. Woods Staton beneficially owns 828,955 class A shares (includes 30,784 shares of common stock issuable upon exercise of stock options, 113,150 restricted share units that have vested or will vest within 60 days of this annual report and excludes 55,908 unvested restricted share units) directly, and indirectly through Chablais Investments S.A. (“Chablais”). Of these 828,955 class A shares, Chablais has pledged an aggregate of 684,971 shares for the benefit of JPMorgan Chase Bank, N.A., in connection with a financing transaction. On a combined basis, Mr. Woods Staton is the beneficial owner of an aggregate of 39.61% of the total economic interests of Arcos Dorados and 76.49% of its total voting interests. The address of Mr. Woods Staton is Mantua No. 6575 (esquina Potosí), Montevideo, Uruguay 11500. The address of Chablais is Level 1, Palm Grove House, Wickham’s Cay 1, Road Town, Tortola, BVI.
|
(5)
|
William H. Gates III (“Mr. Gates”) indirectly owns Class A shares through Cascade Investment, LLC (“Cascade”) and the Bill & Melinda Gates Foundation Trust (the “Trust”). Cascade, the Trust, Mr. Gates and Melinda French Gates (“Mrs. Gates”) filed with the SEC a Schedule 13G/A dated February 13, 2015. Based solely on the disclosure set forth in such Schedule 13G/A, (i) Cascade has sole voting power with respect to 8,580,900 class A shares and sole dispositive power with respect to 8,580,900 class A shares; (ii) the Trust has shared voting power with respect to 3,060,500 class A shares and shared dispositive power with respect to 3,060,500 class A shares; (iii) Mr. Gates has, through Cascade, sole voting power and sole dispositive power with respect to 8,580,900 class A shares and has, through the Trust, shared voting power and shared dispositive power with respect to 3,060,500 class A shares; and (iv) Mrs. Gates has, through the Trust, shared voting power with respect to 3,060,500 class A shares and shared dispositive power with respect to 3,060,500 class A shares. The address of Cascade Investment, LLC is 2365 Carillon Point, Kirkland, Washington 98033. The address of the Trust and Mrs. Gates is 500 Fifth Avenue North, Seattle, Washington 98119. The address of Mr. Gates is One Microsoft Way, Redmond, Washington 98052.
|
(6)
|
Invesco Ltd. filed with the SEC a Schedule 13G/A dated February 11, 2020. Based solely on the disclosure set forth in such Schedule 13G/A, Invesco Ltd. has sole voting power with respect to 8,612,670 class A shares and sole dispositive power with respect to 8,612,670 class A shares. The address of Invesco Ltd. is 1555 Peachtree Street NE, Suite 1800, Atlanta, GA 30309.
|
(7)
|
TIAA-CREF Investment Management, LLC filed with the SEC a Schedule 13G/A dated February 14, 2020. Based solely on the disclosure set forth in such Schedule 13G/A, TIAA-CREF Investment Management, LLC has sole voting power with respect to 11,814,337 class A shares and sole dispositive power with respect to 11,814,337 class A shares. In addition, an affiliate of TIAA-CREF Investment Management, LLC, Nuveen Asset Management, has sole voting power and sole dispositive power with respect to 13,788 class A shares. The address of TIAA-CREF Investment Management, LLC is 730 Third Avenue, New York, NY 10017-3206.
|
(8)
|
Teachers Advisors, LLC filed with the SEC a Schedule 13G/A dated February 14, 2020. Based solely on the disclosure set forth in such Schedule 13G/A, Teachers Advisors, LLC is the investment adviser to three registered investment companies and has sole voting power with respect to 8,722,405 class A shares and sole dispositive power with respect to 8,722,405 class A shares. The address of Teachers Advisors, LLC is 730 Third Avenue, New York, NY 10017-3206.
|
(9)
|
International Value Advisers, LLC filed with the SEC a Schedule 13G/A dated February 13, 2020. Based solely on the disclosure set forth in such Schedule 13G/A, International Value Advisers, LLC has sole voting power with respect to 2,210,768 class A shares and sole dispositive power with respect to 2,379,00 class A shares. The address of International Value Advisers, LLC is 717 Fifth Avenue, 10th Floor, New York, New York, 10022.
|
(10)
|
Numbers do not sum to 100% due to the effects of rounding.
|
(11)
|
Excludes 7,993,602 Class A shares issued and held in treasury.
|
•
|
a $10.2 million dividend paid on April 10, 2020 and dividends of $0.03 per share to be paid on each of August 13, 2020 and December 10, 2020;
|
•
|
a $10.2 million dividend and two $6.1 million dividends in 2019;
|
•
|
a $10.6 million and a $10.4 million dividend in 2018;
|
•
|
four $12.5 million dividends in 2014;
|
•
|
four $12.5 million dividends in 2013;
|
•
|
four $12.5 million dividends in 2012;
|
•
|
four $12.5 million dividends in 2011; and
|
•
|
a $40 million dividend with respect to our results of operations for fiscal year 2009.
|
•
|
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.
|
(a)
|
keep at the office of its registered agent or at such other place or places, within or outside the British Virgin Islands, as the directors may determine, the records and underlying documentation of the company;
|
(b)
|
retain the records and underlying documentation for a period of at least five years from the date: (i) of completion of the transaction to which the records and underlying documentation relate; or (ii) the company terminates the business relationship to which the records and underlying documentation relate; and
|
(c)
|
provide its registered agent without delay any records and underlying documentation in respect of the company that the registered agent requests pursuant to the entitlement of the company’s registered agent to make such a request where the registered agent is required to do so by the British Virgin Islands Financial Services Commission or any other competent authority in the British Virgin Islands acting pursuant to the exercise of a power under an enactment.
|
(a)
|
are sufficient to show and explain the company’s transactions; and
|
(b)
|
will, at any time, enable the financial position of the company to be determined with reasonable accuracy.
|
(a)
|
record of the physical address of the place at which the records and underlying documentation are kept; and
|
(b)
|
record of the name of the person who maintains and controls the company’s records and underlying documentation.
|
(a)
|
its registered agent with the physical address of the new location of the records and underlying documentation; or
|
(b)
|
the name of the new person who maintains and controls the company’s records and underlying documentation.
|
(a)
|
“business relationship” means a continuing arrangement between a company and one or more persons with whom the company engages in business, whether on a one-off, regular or habitual basis; and
|
(b)
|
“records and underlying documentation” includes accounts and records (such as invoices, contracts and similar documents) in relation to: (i) all sums of money received and expended by the company and the matters in respect of which the receipt and expenditure takes place; (ii) all sales and purchases of goods by the company; and (iii) the assets and liabilities of the company.
|
|
Quarter ended
|
||||
|
December 31,
2018
|
March 31,
2019
|
June 30,
2019
|
September 30,
2019
|
December 31,
2019
|
Leverage Ratio
|
4.07
|
3.83
|
3.76
|
3.83
|
3.77
|
Fixed Charge Coverage Ratio
|
1.70
|
1.83
|
1.86
|
1.80
|
1.86
|
•
|
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 shares, by vote or by value;
|
•
|
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.
|
(1)
|
a citizen or individual resident of the United States;
|
(2)
|
a corporation, or other entity taxable as a corporation, created or organized in or under the laws of the United States, any state therein or the District of Columbia; or
|
(3)
|
an estate or trust the income of which is subject to U.S. federal income taxation regardless of its source.
|
•
|
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
|
|
2019
|
2018
|
||
|
(in thousands of U.S. dollars)
|
|||
Audit fees
|
$ 2,670
|
$
|
2,414
|
|
Audit-related fees
|
21
|
21
|
|
|
Tax fees
|
273
|
342
|
|
|
All other fees
|
22
|
36
|
|
Month of repurchase
|
Total number of Class A shares purchased
|
Average price paid per Class A share
|
Total number of Class A shares purchased as part of publicly announced plans or program
|
Approximate dollar value of Class A shares that may be purchased under the program
|
January, 2019
|
1,197,286
|
$8.48
|
1,197,286
|
$3,791,217
|
February, 2019
|
435,490
|
$8.68
|
435,490
|
$0
|
Total at end of period
|
1,632,776
|
$8.58
|
1,632,776
|
$0
|
|
Exhibit No.
|
Description
|
1.1
|
|
2.1
|
|
2.2
|
|
2.3*
|
|
3.1
|
|
4.1
|
|
4.2
|
|
4.3
|
|
4.4
|
|
4.5
|
|
4.6
|
|
4.7
|
|
4.8
|
Exhibit No.
|
Description
|
4.9
|
|
4.10
|
|
4.11
|
|
4.12
|
|
4.13
|
|
4.14
|
|
4.15
|
|
4.16
|
|
4.17
|
|
4.18
|
|
4.19
|
|
4.20
|
|
4.21
|
|
4.22
|
|
4.23
|
|
4.24
|
Exhibit No.
|
Description
|
4.25
|
|
4.26
|
|
4.27
|
|
4.28
|
|
4.29
|
|
4.30*
|
|
4.31*
|
|
4.32
|
|
8.1*
|
|
11.1
|
|
12.1*
|
|
12.2*
|
|
13.1*
|
|
13.2*
|
|
15.1*
|
|
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
|
104**
|
Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)
|
|
*
|
Filed with this Annual Report on Form 20-F.
|
**
|
In accordance with Rule 402 of Regulation S-T, the information in these exhibits shall not be deemed to be “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
|
Arcos Dorados Holdings Inc.
|
|
By:
|
/s/ Mariano Tannenbaum
|
|
Name: Mariano Tannenbaum
|
|
Title: Chief Financial Officer
|
Report of Independent Registered Public Accounting Firm
|
|
Consolidated Statements of Income for the fiscal years ended December 31, 2019, 2018 and 2017
|
|
Consolidated Statements of Comprehensive Income (Loss) for the fiscal years ended December 31, 2019, 2018 and 2017
|
|
Consolidated Balance Sheet as of December 31, 2019 and 2018
|
|
Consolidated Statements of Cash Flows for the fiscal years ended December 31, 2019, 2018 and 2017
|
|
Consolidated Statements of Changes in Equity for the fiscal years ended December 31, 2019, 2018 and 2017
|
|
Notes to the Consolidated Financial Statements as of December 31, 2019 and 2018 and for each of the three years in the period ended December 31, 2019
|
|
|
Adoption of New Lease Accounting Standard
|
|
|
|
Description of the Matter
|
|
As explained above and in Note 3 to the consolidated financial statements, the Company adopted Accounting Standard Codification Topic 842, Leases (“ASC 842”), on January 1, 2019. The adoption of ASC 842 resulted in the recognition of right of use assets and lease liabilities for thousands of $913,086 as of January 1, 2019. Management elected to adopt ASC 842 using the modified retrospective approach.
Certain aspects of adopting ASC 842 required management to exercise significant judgment. In particular, auditing management’s judgments involved in the determination of the lease term for a large volume of contracts in many jurisdictions and in estimating the incremental borrowing rate was complex and especially challenging.
|
How We Addressed the Matter in Our Audit
|
|
We obtained an understanding, evaluated the design and tested the effectiveness of the Company’s internal controls around the implementation of the new guidance. For example, we tested controls over management’s review of the application of accounting policy elections to its portfolio of leases and over management’s review of the incremental borrowing rate (IBR) model.
To test the Company’s adoption of ASC 842, we performed audit procedures that included, among others, evaluating the completeness of the population of contracts that meet the definition of a lease under ASC 842, testing the assumptions made by management in determining the term of the contract based on the Company´s policy, and the accuracy of the Company’s calculations of right of use assets and lease liabilities. Additionally, we tested management’s model for estimating the IBRs, evaluating management’s methodology for developing the IBR and testing significant assumptions.
We also assessed the completeness of the related disclosures in Notes 3, 14 and 15 to the consolidated financial statements.
|
|
|
Impairment of long-lived assets for markets with impairment indicators
|
|
|
|
Description of the Matter
|
|
As of 31 December 2019, the carrying amount of long-lived assets is thousands of $1,919,412, including PPE, Leases right of use assets, net, and intangible assets. As a result of its impairment assessment exercise, the Company recorded a loss of thousands of $8,790, during 2019.
The Company operates in twenty countries in Latin America and the Caribbean with different economic and political circumstances. As explained in note 3 to the consolidated financial statements, management carries out an impairment assessment on long-lived assets annually that includes identifying the existence of impairment indicators at the country level. When impairment indicators are identified for any given country, an estimate of undiscounted future cash flows is prepared by the Company for each individual restaurant located in that country. The estimation of future cash flows requires management to make assumptions about the future business performance and other key inputs that entail significant judgments by management. These estimates can be significantly impacted by many factors, including changes in global and local business and economic conditions, operating costs, inflation, competition and consumer and demographic trends.
Auditing this area is especially challenging because the process of estimation of undiscounted future cash flows implies the determination of key assumptions that are complex and highly judgmental. The key assumptions used by management in the impairment calculation include country economic indicators projections of sales, margin growth rates, capital expenditures and useful lives of long-lived assets.
|
How We Addressed the Matter in Our Audit
|
|
We obtained an understanding and evaluated the design, and tested controls of the impairment calculation process. For example, we identified and tested the operating effectiveness of the Company’s controls around the consistency of the estimation model inputs with the accounting records and the evaluation of the key assumptions made by management.
To test management assessment of impairment of long lived assets our audit procedures included, amongst others, testing the macroeconomic variables used by management, such as inflation rates and GDP growth, assessing the consistency between the estimated cash flows in the model and the business plan approved by management, comparing the remaining life of fixed assets with the accounting records and the clerical accuracy of the computations. Additionally, we evaluated the valuation methods used by management, including the key assumptions used in determining the undiscounted future cash flows of each restaurant. We also involved our valuation services personnel to assist in evaluating the methodology and the key assumptions used in the future cash flows estimation by management. We also compared forecasts to business plans and previous forecasts of projected cash flows to actual results to assess management estimation process.
We also assessed the completeness of the related disclosures in Note 3 to the consolidated financial statements.
|
|
|
Tax and labor contingencies
|
|
|
|
Description of the Matter
|
|
The Company has operations in Brazil representing 47% of the revenues of the group for the year ended December 31,2019 and maintains a provision for tax and labor contingencies in that country that represents a 71% of the provision for contingencies balance of the group as of December 31, 2019. As described in Note 18, the Company assesses the likelihood of any adverse judgments in labor claims or outcomes on its tax positions, including income tax and other taxes, based on the technical merits of a tax position derived from legislation and statutes, legislative intent, regulations, rulings and case law and their applicability to the facts and circumstances of the tax position or labor claim.
Auditing the measurement of tax and labor contingencies related to certain claims and transactions was challenging because their measurement is complex, highly judgmental, and is based on interpretations of tax laws, case-law and jurisprudence and requires estimating the future outcome of individual claims.
|
How We Addressed the Matter in Our Audit
|
|
We obtained an understanding, evaluated the design and tested the operating effectiveness of the Company’s controls around identification of matters, evaluation of tax and labor opinions, and tested management’s review controls over the assumptions made in the estimation of provisions and related disclosures.
To test the labor and tax contingencies provision, our audit procedures included, amongst others, involving personnel with specialized knowledge to assess the technical merits of the Company’s tax positions; assessing the Company’s correspondence with the relevant tax authorities; evaluating third-party tax opinions obtained by the Company; separately corresponding with certain key external tax and legal advisors of the Company, inspecting the minutes of the meetings of the Audit Committee and Board of Directors; obtaining a confirmation letter from the group’s chief legal counsel and evaluating the application of relevant tax law in the Company’s determination of its provision. As part of our evaluation, we have considered historical information to assess the assumptions made by management in relation to the potential outcomes.
We also evaluated the completeness of Company’s disclosures included in Note 18 to the consolidated financial statements in relation to these matters.
|
/s/ Pistrelli, Henry Martin y Asociados S.R.L.
|
|
PISTRELLI, HENRY MARTIN Y ASOCIADOS S.R.L.
|
Member of Ernst & Young Global
|
We have served as the Company’s auditor since 2007.
|
REVENUES
|
|
2019
|
|
2018
|
|
2017
|
||||||
Sales by Company-operated restaurants
|
|
$
|
2,812,287
|
|
|
$
|
2,932,609
|
|
|
$
|
3,162,256
|
|
Revenues from franchised restaurants
|
|
146,790
|
|
|
148,962
|
|
|
157,269
|
|
|||
Total revenues
|
|
2,959,077
|
|
|
3,081,571
|
|
|
3,319,525
|
|
|||
|
|
|
|
|
|
|
||||||
OPERATING COSTS AND EXPENSES
|
|
|
|
|
|
|
|
|
|
|||
Company-operated restaurant expenses:
|
|
|
|
|
|
|
|
|
|
|||
Food and paper
|
|
(1,007,584
|
)
|
|
(1,030,499
|
)
|
|
(1,110,240
|
)
|
|||
Payroll and employee benefits
|
|
(567,653
|
)
|
|
(607,793
|
)
|
|
(683,954
|
)
|
|||
Occupancy and other operating expenses
|
|
(799,633
|
)
|
|
(803,539
|
)
|
|
(842,519
|
)
|
|||
Royalty fees
|
|
(155,388
|
)
|
|
(157,886
|
)
|
|
(163,954
|
)
|
|||
Franchised restaurants – occupancy expenses
|
|
(61,278
|
)
|
|
(67,927
|
)
|
|
(69,836
|
)
|
|||
General and administrative expenses
|
|
(212,515
|
)
|
|
(229,324
|
)
|
|
(244,664
|
)
|
|||
Other operating income (expenses), net
|
|
4,910
|
|
|
(61,145
|
)
|
|
68,577
|
|
|||
Total operating costs and expenses
|
|
(2,799,141
|
)
|
|
(2,958,113
|
)
|
|
(3,046,590
|
)
|
|||
Operating income
|
|
159,936
|
|
|
123,458
|
|
|
272,935
|
|
|||
Net interest expense
|
|
(52,079
|
)
|
|
(52,868
|
)
|
|
(68,357
|
)
|
|||
Gain (loss) from derivative instruments
|
|
439
|
|
|
(565
|
)
|
|
(7,065
|
)
|
|||
Foreign currency exchange results
|
|
12,754
|
|
|
14,874
|
|
|
(14,265
|
)
|
|||
Other non-operating (expenses) income, net
|
|
(2,097
|
)
|
|
270
|
|
|
(435
|
)
|
|||
Income before income taxes
|
|
118,953
|
|
|
85,169
|
|
|
182,813
|
|
|||
Income tax expense
|
|
(38,837
|
)
|
|
(48,136
|
)
|
|
(53,314
|
)
|
|||
Net income
|
|
80,116
|
|
|
37,033
|
|
|
129,499
|
|
|||
Less: Net income attributable to non-controlling interests
|
|
(220
|
)
|
|
(186
|
)
|
|
(333
|
)
|
|||
Net income attributable to Arcos Dorados Holdings Inc.
|
|
$
|
79,896
|
|
|
$
|
36,847
|
|
|
$
|
129,166
|
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
||||||
Earnings per share information:
|
|
|
|
|
|
|
|
|
|
|||
Basic net income per common share attributable to Arcos Dorados Holdings Inc.
|
|
$
|
0.39
|
|
|
$
|
0.18
|
|
|
$
|
0.61
|
|
Diluted net income per common share attributable to Arcos Dorados Holdings Inc.
|
|
0.39
|
|
|
0.18
|
|
|
0.61
|
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
Net income
|
|
$
|
80,116
|
|
|
$
|
37,033
|
|
|
$
|
129,499
|
|
|
|
|
|
|
|
|
||||||
Other comprehensive income (loss), net of tax:
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
||||||
Foreign currency translation
|
|
(12,246
|
)
|
|
(63,130
|
)
|
|
4,783
|
|
|||
Post-employment benefits (expenses):
|
|
|
|
|
|
|
|
|
|
|||
Loss recognized in accumulated other comprehensive loss
|
|
(55
|
)
|
|
(418
|
)
|
|
(938
|
)
|
|||
Reclassification of net loss to consolidated statement of income
|
|
864
|
|
|
494
|
|
|
386
|
|
|||
Post-employment benefits (expenses) (net of deferred income taxes of $42, $122 and $(272)).
|
|
809
|
|
|
76
|
|
|
(552
|
)
|
|||
Cash flow hedges:
|
|
|
|
|
|
|
|
|
|
|||
Net (loss) gain recognized in accumulated other comprehensive loss
|
|
(5,185
|
)
|
|
13,888
|
|
|
6,462
|
|
|||
Reclassification of net loss (gain) to consolidated statement of income
|
|
85
|
|
|
(23,887
|
)
|
|
1,592
|
|
|||
Cash flow hedges (net of deferred income taxes of $1,290, $4,062 and $(3,938))
|
|
(5,100
|
)
|
|
(9,999
|
)
|
|
8,054
|
|
|||
Total other comprehensive (loss) income
|
|
(16,537
|
)
|
|
(73,053
|
)
|
|
12,285
|
|
|||
Comprehensive income (loss)
|
|
63,579
|
|
|
(36,020
|
)
|
|
141,784
|
|
|||
Less: Comprehensive income attributable to non-controlling interests
|
|
(142
|
)
|
|
(52
|
)
|
|
(316
|
)
|
|||
Comprehensive income (loss) attributable to Arcos Dorados Holdings Inc.
|
|
$
|
63,437
|
|
|
$
|
(36,072
|
)
|
|
$
|
141,468
|
|
ASSETS
|
|
2019
|
|
2018
|
||||
Current assets
|
|
|
|
|
||||
Cash and cash equivalents
|
|
$
|
121,880
|
|
|
$
|
197,282
|
|
Short-term investment
|
|
25
|
|
|
—
|
|
||
Accounts and notes receivable, net
|
|
99,862
|
|
|
84,287
|
|
||
Other receivables
|
|
28,174
|
|
|
25,350
|
|
||
Inventories
|
|
37,815
|
|
|
46,089
|
|
||
Prepaid expenses and other current assets
|
|
117,612
|
|
|
109,230
|
|
||
McDonald’s Corporation’s indemnification for contingencies
|
|
—
|
|
|
2,324
|
|
||
Total current assets
|
|
405,368
|
|
|
464,562
|
|
||
Non-current assets
|
|
|
|
|
|
|
||
Miscellaneous
|
|
95,814
|
|
|
99,049
|
|
||
Collateral deposits
|
|
2,500
|
|
|
2,500
|
|
||
Property and equipment, net
|
|
960,986
|
|
|
856,192
|
|
||
Net intangible assets and goodwill
|
|
43,044
|
|
|
41,021
|
|
||
Deferred income taxes
|
|
68,368
|
|
|
58,334
|
|
||
Derivative instruments
|
|
57,828
|
|
|
54,735
|
|
||
McDonald’s Corporation’s indemnification for contingencies
|
|
1,612
|
|
|
1,646
|
|
||
Lease right of use asset, net
|
|
922,165
|
|
|
—
|
|
||
Total non-current assets
|
|
2,152,317
|
|
|
1,113,477
|
|
||
Total assets
|
|
$
|
2,557,685
|
|
|
$
|
1,578,039
|
|
LIABILITIES AND EQUITY
|
|
|
|
|
|
|
||
Current liabilities
|
|
|
|
|
|
|
||
Accounts payable
|
|
$
|
259,577
|
|
|
$
|
242,455
|
|
Royalties payable to McDonald’s Corporation
|
|
17,132
|
|
|
14,576
|
|
||
Income taxes payable
|
|
61,982
|
|
|
53,843
|
|
||
Other taxes payable
|
|
61,823
|
|
|
61,006
|
|
||
Accrued payroll and other liabilities
|
|
86,379
|
|
|
94,166
|
|
||
Provision for contingencies
|
|
2,035
|
|
|
2,436
|
|
||
Interest payable
|
|
9,936
|
|
|
9,951
|
|
||
Short-term debt
|
|
13,296
|
|
|
356
|
|
||
Current portion of long-term debt
|
|
3,233
|
|
|
3,836
|
|
||
Derivative instruments
|
|
9,907
|
|
|
10,687
|
|
||
Operating lease liabilities
|
|
70,147
|
|
|
—
|
|
||
Total current liabilities
|
|
595,447
|
|
|
493,312
|
|
||
Non-current liabilities
|
|
|
|
|
|
|
||
Accrued payroll and other liabilities
|
|
23,497
|
|
|
35,322
|
|
||
Provision for contingencies
|
|
24,123
|
|
|
26,073
|
|
||
Long-term debt, excluding current portion
|
|
623,575
|
|
|
626,424
|
|
||
Derivative instruments
|
|
3,598
|
|
|
3,192
|
|
||
Deferred income taxes
|
|
4,297
|
|
|
957
|
|
||
Operating lease liabilities
|
|
861,582
|
|
|
—
|
|
||
Total non-current liabilities
|
|
1,540,672
|
|
|
691,968
|
|
||
Total liabilities
|
|
$
|
2,136,119
|
|
|
$
|
1,185,280
|
|
Equity
|
|
|
|
|
|
|
||
Class A shares of common stock
|
|
$
|
383,204
|
|
|
$
|
379,845
|
|
Class B shares of common stock
|
|
132,915
|
|
|
132,915
|
|
||
Additional paid-in capital
|
|
13,375
|
|
|
14,850
|
|
||
Retained earnings
|
|
471,149
|
|
|
413,074
|
|
||
Accumulated other comprehensive loss
|
|
(519,505
|
)
|
|
(502,266
|
)
|
||
Common stock in treasury
|
|
(60,000
|
)
|
|
(46,035
|
)
|
||
Total Arcos Dorados Holdings Inc. shareholders’ equity
|
|
421,138
|
|
|
392,383
|
|
||
Non-controlling interests in subsidiaries
|
|
428
|
|
|
376
|
|
||
Total equity
|
|
421,566
|
|
|
392,759
|
|
||
Total liabilities and equity
|
|
$
|
2,557,685
|
|
|
$
|
1,578,039
|
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
Operating activities
|
|
|
|
|
|
|
||||||
Net income attributable to Arcos Dorados Holdings Inc.
|
|
$
|
79,896
|
|
|
$
|
36,847
|
|
|
$
|
129,166
|
|
Adjustments to reconcile net income attributable to Arcos Dorados Holdings Inc. to cash provided by operating activities:
|
|
|
|
|
|
|
|
|
|
|||
Non-cash charges and credits:
|
|
|
|
|
|
|
|
|
|
|||
Depreciation and amortization
|
|
123,218
|
|
|
105,800
|
|
|
99,382
|
|
|||
(Gain) loss from derivative instruments
|
|
(439
|
)
|
|
565
|
|
|
7,065
|
|
|||
Amortization and accrual of letter of credit fees and deferred financing costs
|
|
3,190
|
|
|
3,189
|
|
|
3,433
|
|
|||
Gain of property and equipment sales
|
|
(664
|
)
|
|
(2,030
|
)
|
|
(93,122
|
)
|
|||
Deferred income taxes
|
|
(7,974
|
)
|
|
648
|
|
|
1,731
|
|
|||
Foreign currency exchange results
|
|
(11,656
|
)
|
|
(15,388
|
)
|
|
20,366
|
|
|||
Accrued net share-based compensation expense
|
|
4,060
|
|
|
2,638
|
|
|
4,216
|
|
|||
Impairment of long-lived assets and goodwill
|
|
9,063
|
|
|
19,117
|
|
|
17,764
|
|
|||
Write-offs of property and equipment
|
|
4,733
|
|
|
4,167
|
|
|
8,528
|
|
|||
Gain on Sales of restaurants businesses
|
|
(5,078
|
)
|
|
(6,154
|
)
|
|
(14,742
|
)
|
|||
Others, net
|
|
(955
|
)
|
|
8,896
|
|
|
6,305
|
|
|||
Changes in assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|||
Accounts payable
|
|
39,434
|
|
|
16,563
|
|
|
102,660
|
|
|||
Accounts and notes receivable and other receivables
|
|
(27,988
|
)
|
|
(35,770
|
)
|
|
(50,211
|
)
|
|||
Inventories, prepaid and other assets
|
|
(21,802
|
)
|
|
(12,074
|
)
|
|
(53,466
|
)
|
|||
Income taxes payable
|
|
10,931
|
|
|
12,529
|
|
|
18,946
|
|
|||
Other taxes payable
|
|
20,891
|
|
|
8,675
|
|
|
12,672
|
|
|||
Interest payable
|
|
(14
|
)
|
|
(35
|
)
|
|
2,942
|
|
|||
Accrued payroll and other liabilities and provision for contingencies
|
|
1,320
|
|
|
27,134
|
|
|
35,075
|
|
|||
Others
|
|
3,315
|
|
|
4,414
|
|
|
(3,540
|
)
|
|||
Net cash provided by operating activities
|
|
223,481
|
|
|
179,731
|
|
|
255,170
|
|
|||
Investing activities
|
|
|
|
|
|
|
|
|
|
|||
Property and equipment expenditures
|
|
(265,235
|
)
|
|
(197,041
|
)
|
|
(174,766
|
)
|
|||
Purchases of restaurant businesses paid at acquisition date
|
|
(2,658
|
)
|
|
—
|
|
|
(870
|
)
|
|||
Proceeds from sales of property and equipment and related advances
|
|
3,340
|
|
|
2,891
|
|
|
61,983
|
|
|||
Proceeds from sales of restaurant businesses and related advances
|
|
4,818
|
|
|
10,158
|
|
|
10,407
|
|
|||
Recovery (acquisitions) of short-term investments
|
|
—
|
|
|
19,588
|
|
|
(19,588
|
)
|
|||
Other investing activity
|
|
(1,256
|
)
|
|
620
|
|
|
(1,646
|
)
|
|||
Net cash used in investing activities
|
|
(260,991
|
)
|
|
(163,784
|
)
|
|
(124,480
|
)
|
|||
Financing activities
|
|
|
|
|
|
|
|
|
|
|||
Issuance of 2027 Notes
|
|
—
|
|
|
—
|
|
|
265,000
|
|
|||
Repayment of secured loan agreement
|
|
—
|
|
|
—
|
|
|
(169,511
|
)
|
|||
Purchase of 2023 Notes
|
|
—
|
|
|
—
|
|
|
(48,885
|
)
|
|||
Net payment of derivative instruments
|
|
—
|
|
|
—
|
|
|
(40,822
|
)
|
|||
Dividend payments to Arcos Dorados Holdings Inc.’ shareholders
|
|
(22,425
|
)
|
|
(20,937
|
)
|
|
—
|
|
|||
Net short-term borrowings
|
|
13,159
|
|
|
—
|
|
|
—
|
|
|||
Treasury stock purchases
|
|
(13,965
|
)
|
|
(46,035
|
)
|
|
—
|
|
|||
Other financing activities
|
|
(6,401
|
)
|
|
(6,470
|
)
|
|
(9,135
|
)
|
|||
Net cash used in financing activities
|
|
(29,632
|
)
|
|
(73,442
|
)
|
|
(3,353
|
)
|
|||
Effect of exchange rate changes on cash and cash equivalents
|
|
(8,260
|
)
|
|
(53,714
|
)
|
|
(13,649
|
)
|
|||
(Decrease) increase in cash and cash equivalents
|
|
(75,402
|
)
|
|
(111,209
|
)
|
|
113,688
|
|
|||
Cash and cash equivalents at the beginning of the year
|
|
197,282
|
|
|
308,491
|
|
|
194,803
|
|
|||
Cash and cash equivalents at the end of the year
|
|
$
|
121,880
|
|
|
$
|
197,282
|
|
|
$
|
308,491
|
|
Supplemental cash flow information:
|
|
|
|
|
|
|
|
|
|
|||
Cash paid during the year for:
|
|
|
|
|
|
|
|
|
|
|||
Interest
|
|
$
|
52,458
|
|
|
$
|
55,400
|
|
|
$
|
53,206
|
|
Income tax
|
|
34,092
|
|
|
32,188
|
|
|
24,112
|
|
|||
Non-cash investing and financing activities:
|
|
|
|
|
|
|
|
|
|
|||
Seller financing pending of payment and settlement of franchise receivables related to purchases of restaurant businesses
|
|
905
|
|
|
469
|
|
|
36
|
|
|||
Exchange of assets
|
|
—
|
|
|
—
|
|
|
6,721
|
|
|
|
Arcos Dorados Holdings Inc.’ Shareholders
|
|
|
|
|
||||||||||||||||||||||||||||||
|
|
Class A shares of common stock
|
|
Class B shares of common stock
|
|
Additional paid-in capital
|
|
Retained earnings
|
|
Accumulated other comprehensive loss
|
|
Common Stock in treasury
|
|
Total
|
|
Non-controlling interests
|
|
Total
|
||||||||||||||||||
|
|
Number
|
|
Amount
|
|
Number
|
|
Amount
|
|
Number
|
|
Amount
|
||||||||||||||||||||||||
Balances at December 31, 2016
|
|
130,711,224
|
|
|
373,969
|
|
|
80,000,000
|
|
|
132,915
|
|
|
13,788
|
|
|
271,968
|
|
|
(441,649
|
)
|
|
—
|
|
|
—
|
|
|
350,991
|
|
|
585
|
|
|
351,576
|
|
Net income for the year
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
129,166
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
129,166
|
|
|
333
|
|
|
129,499
|
|
Other comprehensive loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
12,302
|
|
|
—
|
|
|
—
|
|
|
12,302
|
|
|
(17
|
)
|
|
12,285
|
|
Issuance of shares in connection with the partial vesting of outstanding restricted share units under the 2011 Equity Incentive Plan
|
|
361,284
|
|
|
2,763
|
|
|
—
|
|
|
—
|
|
|
(2,763
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Stock-based compensation related to the 2011 Equity Incentive Plan
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,191
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,191
|
|
|
—
|
|
|
3,191
|
|
Portion of non-controlling interests related to business sold
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(108
|
)
|
|
(108
|
)
|
Dividends to non-controlling interests
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(301
|
)
|
|
(301
|
)
|
Balances at December 31, 2017
|
|
131,072,508
|
|
|
376,732
|
|
|
80,000,000
|
|
|
132,915
|
|
|
14,216
|
|
|
401,134
|
|
|
(429,347
|
)
|
|
—
|
|
|
—
|
|
|
495,650
|
|
|
492
|
|
|
496,142
|
|
Net income for the year
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
36,847
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
36,847
|
|
|
186
|
|
|
37,033
|
|
Other comprehensive income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(72,919
|
)
|
|
—
|
|
|
—
|
|
|
(72,919
|
)
|
|
(134
|
)
|
|
(73,053
|
)
|
Dividends to Arcos Dorados Holdings Inc.’s shareholders ($0.10 per share)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(20,937
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(20,937
|
)
|
|
—
|
|
|
(20,937
|
)
|
Dividends on restricted share units under the 2011 Equity Incentive Plan
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(174
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(174
|
)
|
|
—
|
|
|
(174
|
)
|
Issuance of shares in connection with the partial vesting of outstanding restricted share units under the 2011 Equity Incentive Plan
|
|
520,565
|
|
|
3,113
|
|
|
—
|
|
|
—
|
|
|
(3,113
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Stock-based compensation related to the 2011 Equity Incentive Plan
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,747
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,747
|
|
|
—
|
|
|
3,747
|
|
Treasury stock purchases
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(6,360,826
|
)
|
|
(46,035
|
)
|
|
(46,035
|
)
|
|
—
|
|
|
(46,035
|
)
|
Dividends to non-controlling interests
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(168
|
)
|
|
(168
|
)
|
Adoption of accounting standard ASC 606 - net of $1,555 of deferred income tax
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,796
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,796
|
)
|
|
—
|
|
|
(3,796
|
)
|
Balances at December 31, 2018
|
|
131,593,073
|
|
|
379,845
|
|
|
80,000,000
|
|
|
132,915
|
|
|
14,850
|
|
|
413,074
|
|
|
(502,266
|
)
|
|
(6,360,826
|
)
|
|
(46,035
|
)
|
|
392,383
|
|
|
376
|
|
|
392,759
|
|
Net income for the year
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
79,896
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
79,896
|
|
|
220
|
|
|
80,116
|
|
Other comprehensive loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(16,459
|
)
|
|
—
|
|
|
—
|
|
|
(16,459
|
)
|
|
(78
|
)
|
|
(16,537
|
)
|
Dividends to Arcos Dorados Holdings Inc.’s shareholders ($0.11 per share)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(22,425
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(22,425
|
)
|
|
—
|
|
|
(22,425
|
)
|
Dividends on restricted share units under the 2011 Equity Incentive Plan
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(176
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(176
|
)
|
|
—
|
|
|
(176
|
)
|
Issuance of shares in connection with the partial vesting of outstanding restricted share units under the 2011 Equity Incentive Plan
|
|
470,558
|
|
|
3,359
|
|
|
—
|
|
|
—
|
|
|
(3,359
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Stock-based compensation related to the 2011 Equity Incentive Plan
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,884
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,884
|
|
|
—
|
|
|
1,884
|
|
Treasury stock purchases
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,632,776
|
)
|
|
(13,965
|
)
|
|
(13,965
|
)
|
|
—
|
|
|
(13,965
|
)
|
Dividends to non-controlling interests
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(90
|
)
|
|
(90
|
)
|
Adoption of ASU 2017-12
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
780
|
|
|
(780
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Balances at December 31, 2019
|
|
132,063,631
|
|
|
383,204
|
|
|
80,000,000
|
|
|
132,915
|
|
|
13,375
|
|
|
471,149
|
|
|
(519,505
|
)
|
|
(7,993,602
|
)
|
|
(60,000
|
)
|
|
421,138
|
|
|
428
|
|
|
421,566
|
|
Balance Sheet
|
|
Balance at December 31, 2017
|
|
Adjustments Due to ASC 606
|
|
Balance at January 1, 2018
|
||||||
ASSETS
|
|
|
|
|
|
|
||||||
Non-current Assets
|
|
|
|
|
|
|
||||||
Deferred income taxes
|
|
74,299
|
|
|
|
1,555
|
|
|
|
75,854
|
|
|
LIABILITIES AND EQUITY
|
|
|
|
|
|
|
||||||
Current liabilities
|
|
|
|
|
|
|
||||||
Accrued payroll and other liabilities
|
|
119,088
|
|
|
|
339
|
|
|
|
119,427
|
|
|
Non-current liabilities
|
|
|
|
|
|
|
||||||
Accrued payroll and other liabilities
|
|
29,366
|
|
|
|
5,012
|
|
|
|
34,378
|
|
|
EQUITY
|
|
|
|
|
|
|
||||||
Retained earnings
|
|
401,134
|
|
|
|
(3,796
|
)
|
|
|
397,338
|
|
|
|
For the fiscal year ended December 31, 2018
|
|||||||||||
Income Statement
|
|
As Reported
|
|
Balances Without Adoption of ASC 606
|
|
Effect of Change
|
||||||
|
|
|
|
|
|
|
||||||
Revenues from franchised restaurants
|
|
148,962
|
|
|
|
149,834
|
|
|
|
(872
|
)
|
|
Income tax expense
|
|
(48,136
|
)
|
|
|
(48,393
|
)
|
|
|
257
|
|
|
Fiscal year
|
|
Markets
|
|
Total
|
||
2019
|
|
Mexico, Puerto Rico, USVI, Peru, Aruba, Curacao, Colombia and Venezuela
|
|
$
|
8,790
|
|
2018
|
|
Mexico, Puerto Rico, USVI, Peru, Colombia, Venezuela and Trinidad and Tobago.
|
|
18,950
|
|
|
2017
|
|
Mexico, Puerto Rico, USVI, Peru, Ecuador, Colombia, Venezuela and Trinidad and Tobago
|
|
17,564
|
|
Fiscal year
|
|
Markets
|
|
Total
|
||
2019
|
|
Ecuador
|
|
$
|
273
|
|
2018
|
|
Peru
|
|
167
|
|
|
2017
|
|
Mexico
|
|
200
|
|
Consolidated Balance Sheet
|
|
Balance at December 31, 2018
|
|
Adjustments Due to ASC 842
|
|
Balance at January 1, 2019
|
|
|
|||
ASSETS
|
|
|
|
|
|
|
|
|
|||
Non-current assets
|
|
|
|
|
|
|
|
|
|||
Lease right of use asset, net
|
|
—
|
|
|
896,682
|
|
|
896,682
|
|
|
(i)
|
LIABILITIES AND EQUITY
|
|
|
|
|
|
|
|
|
|||
Current liabilities
|
|
|
|
|
|
|
|
|
|||
Operating lease liabilities
|
|
—
|
|
|
72,272
|
|
|
72,272
|
|
|
(ii)
|
Non-current liabilities
|
|
|
|
|
|
|
|
|
|||
Accrued payroll and other liabilities
|
|
35,322
|
|
|
(16,404
|
)
|
|
18,918
|
|
|
(iii)
|
Operating lease liabilities
|
|
—
|
|
|
840,814
|
|
|
840,814
|
|
|
(iv)
|
|
|
As of December 31, 2019
|
|||||||
Consolidated Balance Sheet
|
|
As Reported
|
|
Balances Without Adoption of ASC 842
|
|
Effect of Change
|
|||
ASSETS
|
|
|
|
|
|
|
|||
Non-current assets
|
|
|
|
|
|
|
|||
Lease right of use asset, net
|
|
922,165
|
|
|
—
|
|
|
922,165
|
|
LIABILITIES AND EQUITY
|
|
|
|
|
|
|
|||
Current liabilities
|
|
|
|
|
|
|
|||
Operating lease liabilities
|
|
70,147
|
|
|
—
|
|
|
70,147
|
|
Non-current liabilities
|
|
|
|
|
|
|
|||
Accrued payroll and other liabilities
|
|
23,497
|
|
|
41,084
|
|
|
(17,587
|
)
|
Operating lease liabilities
|
|
861,582
|
|
|
—
|
|
|
861,582
|
|
EQUITY
|
|
|
|
|
|
|
|||
Retained earnings
|
|
471,149
|
|
|
467,560
|
|
|
3,589
|
|
Accumulated other comprehensive loss
|
|
(519,505
|
)
|
|
(523,939
|
)
|
|
4,434
|
|
|
|
For the fiscal year ended December 31, 2019
|
|||||||
Consolidated Statement of Income
|
|
As Reported
|
|
Balances Without Adoption of ASC 842
|
|
Effect of Change
|
|||
|
|
|
|
|
|
|
|||
Foreign currency exchange results
|
|
12,754
|
|
|
9,165
|
|
|
3,589
|
|
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:
|
|
2019
|
|
2018
|
|
2017
|
||||||
Property and equipment
|
|
$
|
1,471
|
|
|
$
|
413
|
|
|
$
|
429
|
|
Identifiable intangible assets
|
|
1,347
|
|
|
56
|
|
|
5,346
|
|
|||
Goodwill
|
|
1,589
|
|
|
—
|
|
|
200
|
|
|||
Assumed debt
|
|
(77
|
)
|
|
—
|
|
|
—
|
|
|||
Gain on purchase of franchised restaurants
|
|
(767
|
)
|
|
—
|
|
|
(4,808
|
)
|
|||
Purchase price
|
|
3,563
|
|
|
469
|
|
|
1,167
|
|
|||
Restaurants sold in exchange
|
|
—
|
|
|
—
|
|
|
(261
|
)
|
|||
Settlement of franchise receivables
|
|
(905
|
)
|
|
(469
|
)
|
|
(36
|
)
|
|||
Net cash paid at acquisition date
|
|
$
|
2,658
|
|
|
$
|
—
|
|
|
$
|
870
|
|
|
|
2019
|
|
2018
|
||||
Receivables from franchisees
|
|
$
|
63,618
|
|
|
$
|
55,672
|
|
Debit and credit card receivables
|
|
43,741
|
|
|
40,474
|
|
||
Meal voucher receivables
|
|
13,017
|
|
|
10,565
|
|
||
Notes receivable
|
|
1,928
|
|
|
2,575
|
|
||
Allowance for doubtful accounts
|
|
(22,442
|
)
|
|
(24,999
|
)
|
||
|
|
$
|
99,862
|
|
|
$
|
84,287
|
|
|
|
2019
|
|
2018
|
||||
Prepaid taxes
|
|
$
|
73,932
|
|
|
$
|
74,538
|
|
Prepaid expenses
|
|
24,266
|
|
|
21,868
|
|
||
Promotion items and related advances
|
|
19,092
|
|
|
12,417
|
|
||
Others
|
|
322
|
|
|
407
|
|
||
|
|
$
|
117,612
|
|
|
$
|
109,230
|
|
|
|
2019
|
|
2018
|
||||
Judicial deposits
|
|
$
|
46,148
|
|
|
$
|
43,168
|
|
Tax credits
|
|
21,067
|
|
|
27,563
|
|
||
Prepaid property and equipment
|
|
7,770
|
|
|
9,775
|
|
||
Notes receivable
|
|
5,876
|
|
|
4,241
|
|
||
Rent deposits
|
|
3,196
|
|
|
2,908
|
|
||
Others
|
|
11,757
|
|
|
11,394
|
|
||
|
|
$
|
95,814
|
|
|
$
|
99,049
|
|
|
|
2019
|
|
2018
|
||||
Land
|
|
$
|
146,517
|
|
|
$
|
142,262
|
|
Buildings and leasehold improvements
|
|
710,046
|
|
|
623,612
|
|
||
Equipment
|
|
784,181
|
|
|
673,117
|
|
||
Total cost
|
|
1,640,744
|
|
|
1,438,991
|
|
||
Total accumulated depreciation
|
|
(679,758
|
)
|
|
(582,799
|
)
|
||
|
|
$
|
960,986
|
|
|
$
|
856,192
|
|
|
|
2019
|
|
2018
|
||||
Net intangible assets (i)
|
|
|
|
|
||||
Computer software cost
|
|
$
|
75,224
|
|
|
$
|
69,700
|
|
Initial franchise fees
|
|
16,146
|
|
|
14,614
|
|
||
Reacquired franchised rights
|
|
13,296
|
|
|
12,511
|
|
||
Letter of credit fees
|
|
940
|
|
|
940
|
|
||
Others
|
|
1,000
|
|
|
1,000
|
|
||
Total cost
|
|
106,606
|
|
|
98,765
|
|
||
Total accumulated amortization
|
|
(70,345
|
)
|
|
(63,683
|
)
|
||
Subtotal
|
|
36,261
|
|
|
35,082
|
|
Goodwill (ii)
|
|
2019
|
|
2018
|
||||
Brazil
|
|
4,124
|
|
|
4,280
|
|
||
Argentina
|
|
1,585
|
|
|
226
|
|
||
Chile
|
|
988
|
|
|
1,073
|
|
||
Colombia
|
|
86
|
|
|
87
|
|
||
Ecuador
|
|
—
|
|
|
273
|
|
||
Subtotal
|
|
6,783
|
|
|
5,939
|
|
||
|
|
$
|
43,044
|
|
|
$
|
41,021
|
|
(i)
|
Total amortization expense for fiscal years 2019, 2018 and 2017 amounted to $11,580, $11,310 and $10,297, respectively. The estimated aggregate amortization expense for each of the five succeeding fiscal years and thereafter is as follows: $14,281 for 2020, $11,262 for 2021; $4,333 for 2022; $1,352 for 2023; $1,310 for 2024; and thereafter $3,723.
|
(ii)
|
Related to the acquisition of franchised restaurants (Brazil, Argentina, Chile and Colombia) and non-controlling interests in subsidiaries (Ecuador and Chile).
|
|
|
2019
|
|
2018
|
||||
Current:
|
|
|
|
|
||||
Accrued payroll
|
|
$
|
77,087
|
|
|
$
|
77,286
|
|
Accrued expenses
|
|
6,586
|
|
|
10,330
|
|
||
Other liabilities
|
|
2,706
|
|
|
6,550
|
|
||
|
|
$
|
86,379
|
|
|
$
|
94,166
|
|
Non-current:
|
|
|
|
|
|
|
||
Phantom RSU award liability
|
|
$
|
2,102
|
|
|
$
|
—
|
|
Deferred rent
|
|
—
|
|
|
16,404
|
|
||
Deferred revenues - Initial franchise fee
|
|
5,802
|
|
|
5,827
|
|
||
Deferred income
|
|
6,392
|
|
|
6,272
|
|
||
Security deposits
|
|
6,836
|
|
|
6,322
|
|
||
Other liabilities
|
|
2,365
|
|
|
497
|
|
||
|
|
$
|
23,497
|
|
|
$
|
35,322
|
|
|
|
2019
|
|
2018
|
||||
Short-term bank loans (i)
|
|
10,794
|
|
|
—
|
|
||
Revolving Credit Facility (ii)
|
|
2,500
|
|
|
—
|
|
||
Bank overdrafts
|
|
2
|
|
|
356
|
|
||
|
|
$
|
13,296
|
|
|
$
|
356
|
|
(i)
|
Short-term bank loans
|
(ii)
|
Revolving credit facilities
|
|
|
2019
|
|
2018
|
||||
2027 Notes
|
|
$
|
265,000
|
|
|
$
|
265,000
|
|
2023 Notes
|
|
348,069
|
|
|
348,069
|
|
||
Finance lease obligations
|
|
5,419
|
|
|
6,503
|
|
||
Other long-term borrowings
|
|
13,284
|
|
|
16,676
|
|
||
Subtotal
|
|
631,772
|
|
|
636,248
|
|
||
Discount on 2023 Notes
|
|
(2,504
|
)
|
|
(3,156
|
)
|
||
Premium on 2023 Notes
|
|
937
|
|
|
1,187
|
|
||
Deferred financing costs
|
|
(3,397
|
)
|
|
(4,019
|
)
|
||
Total
|
|
626,808
|
|
|
630,260
|
|
||
Current portion of long-term debt
|
|
3,233
|
|
|
3,836
|
|
||
Long-term debt, excluding current portion
|
|
$
|
623,575
|
|
|
$
|
626,424
|
|
|
|
|
|
|
Principal as of December 31,
|
|
|
|||||||
|
Annual interest rate
|
|
Currency
|
|
2019
|
|
2018
|
|
Maturity
|
|||||
2027 Notes
|
5.875
|
%
|
|
USD
|
|
$
|
265,000
|
|
|
$
|
265,000
|
|
|
April 4, 2027
|
2023 Notes
|
6.625
|
%
|
|
USD
|
|
348,069
|
|
|
348,069
|
|
|
September 27, 2023
|
|
|
Interest Expense (i)
|
|
DFC Amortization (i)
|
|
Amortization of Discount, net (i)
|
||||||||||||||||||||||||||||||
|
|
2019
|
|
2018
|
|
2017
|
|
2019
|
|
2018
|
|
2017
|
|
2019
|
|
2018
|
|
2017
|
||||||||||||||||||
2027 Notes
|
|
$
|
15,569
|
|
|
$
|
15,569
|
|
|
$
|
11,547
|
|
|
$
|
299
|
|
|
$
|
299
|
|
|
$
|
224
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
2023 Notes
|
|
23,060
|
|
|
23,060
|
|
|
23,885
|
|
|
323
|
|
|
323
|
|
|
610
|
|
|
402
|
|
|
397
|
|
|
752
|
|
(i)
|
These charges are included within "Net interest expense" in the consolidated statements of income.
|
Lender
|
|
Annual Interest Rate
|
Citibank N.A.
|
|
3M LIBOR + 2.439%
|
Itaú BBA International plc
|
|
5.26%
|
Banco Santander (Brasil) S.A., Cayman Islands Branch
|
|
4.7863%
|
Bank of America N.A.
|
|
3M LIBOR + 4.00%
|
JP Morgan Chase Bank, N.A.
|
|
3M LIBOR + 3.92%
|
Interest Expense (i) (ii)
|
|
DFC Amortization (ii)
|
|
Other Costs (ii) (iii)
|
||||||||||||||||||||||||||||||
2019
|
|
2018
|
|
2017
|
|
2019
|
|
2018
|
|
2017
|
|
2019
|
|
2018
|
|
2017
|
||||||||||||||||||
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,570
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,251
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,249
|
|
(i)
|
This charge do not include the effect of the cross-currency interest rate swap agreements mentioned in Note 13, amounting to a loss of $6,921, during fiscal year 2017. Including this effect the total interest cost amounts to $9,491.
|
(ii)
|
This charge is included within "Net interest expense" in the consolidated statement of income.
|
(iii)
|
Transaction costs related to the repayment of the Loan.
|
|
|
Principal
|
|
Interest
|
|
Total
|
||||||
2020
|
|
$
|
3,233
|
|
|
$
|
40,190
|
|
|
$
|
43,423
|
|
2021
|
|
3,173
|
|
|
39,896
|
|
|
43,069
|
|
|||
2022
|
|
3,370
|
|
|
39,568
|
|
|
42,938
|
|
|||
2023
|
|
350,959
|
|
|
39,292
|
|
|
390,251
|
|
|||
2024
|
|
2,307
|
|
|
15,974
|
|
|
18,281
|
|
|||
Thereafter
|
|
268,730
|
|
|
41,151
|
|
|
309,881
|
|
|||
Total payments
|
|
631,772
|
|
|
216,071
|
|
|
847,843
|
|
|||
Interest
|
|
—
|
|
|
(216,071
|
)
|
|
(216,071
|
)
|
|||
Discount on 2023 Notes
|
|
(2,504
|
)
|
|
—
|
|
|
(2,504
|
)
|
|||
Premium on 2023 Notes
|
|
937
|
|
|
—
|
|
|
937
|
|
|||
Deferred financing cost
|
|
(3,397
|
)
|
|
—
|
|
|
(3,397
|
)
|
|||
Long-term debt
|
|
$
|
626,808
|
|
|
$
|
—
|
|
|
$
|
626,808
|
|
|
|
Assets
|
|
|
Liabilities
|
||||||||||
Type of Derivative
|
Balance Sheets Location
|
2019
|
2018
|
|
Balance Sheets Location
|
2019
|
2018
|
||||||||
Derivatives designated as hedging instruments
|
|
|
|
|
|||||||||||
Cash Flow hedge
|
|
|
|
|
|
|
|
|
|
||||||
Forward contracts
|
Other receivables
|
$
|
259
|
|
$
|
628
|
|
|
Accrued payroll and other liabilities
|
$
|
(532
|
)
|
$
|
(180
|
)
|
Cross-currency interest rate swap
|
Derivative instruments
|
37,219
|
|
37,869
|
|
|
Derivative instruments
|
(8,179
|
)
|
(8,728
|
)
|
||||
Call spread
|
Derivative instruments
|
20,609
|
|
16,867
|
|
|
Derivative instruments
|
—
|
|
—
|
|
||||
Coupon-only swap
|
Derivative instruments
|
—
|
|
—
|
|
|
Derivative instruments
|
(5,326
|
)
|
(5,152
|
)
|
||||
Subtotal
|
|
58,087
|
|
55,364
|
|
|
|
(14,037
|
)
|
(14,060
|
)
|
||||
Derivatives not designated as hedging instruments
|
|
|
|
|
|
|
|
|
|
|
|||||
Forward contracts
|
Other receivables
|
20
|
|
99
|
|
|
Accrued payroll and other liabilities
|
—
|
|
(144
|
)
|
||||
Subtotal
|
|
20
|
|
99
|
|
|
|
—
|
|
(144
|
)
|
||||
Total derivative instruments
|
$
|
58,107
|
|
$
|
55,463
|
|
|
|
$
|
(14,037
|
)
|
$
|
(14,204
|
)
|
Bank
|
|
Payable
|
|
Receivable
|
|
Interest payment dates
|
|
Maturity
|
||||||||||||
|
Currency
|
|
Amount
|
|
Interest rate
|
|
Currency
|
|
Amount
|
|
Interest rate
|
|
||||||||
JP Morgan Chase Bank, N.A. (i)
|
|
BRL
|
|
108,000
|
|
|
13
|
%
|
|
$
|
|
35,400
|
|
|
4.38
|
%
|
|
March 31/ September 30
|
|
September 2023
|
JP Morgan Chase Bank, N.A.
|
|
BRL
|
|
98,670
|
|
|
13
|
%
|
|
$
|
|
30,000
|
|
|
6.02
|
%
|
|
March 31/ September 30
|
|
September 2023
|
Citibank N.A.
|
|
BRL
|
|
94,200
|
|
|
13
|
%
|
|
$
|
|
30,000
|
|
|
6.29
|
%
|
|
March 31/ September 30
|
|
September 2023
|
(i)
|
During the fiscal year ended December 31, 2017, the agreement was amended twice: on February 9, 2017 and February 22, 2017. All the terms of the swap agreement match the terms of the BRL intercompany loan receivable. As a result of the amendments the Company paid $2,689. According to ASC 815-30-40, the amount deferred in accumulated other comprehensive loss until the date of the last amendment, amounting to $677 as of December 31, 2017, will be amortized to earnings as the originally hedged cash flows affects the statement of income.
|
Bank
|
|
Payable
|
|
Receivable
|
|
Interest payment dates
|
|
Maturity
|
||||||||||||
|
Currency
|
|
Amount
|
|
Interest rate
|
|
Currency
|
|
Amount
|
|
Interest rate
|
|
||||||||
BAML (i)
|
|
BRL
|
|
156,250
|
|
|
13.64
|
%
|
|
$
|
|
50,000
|
|
|
6.91
|
%
|
|
March 31/ September 30
|
|
April 2027
|
Banco Santander S.A.
|
|
BRL
|
|
155,500
|
|
|
13.77
|
%
|
|
$
|
|
50,000
|
|
|
6.91
|
%
|
|
June 30/ December 31
|
|
September 2023
|
(i)
|
Bank of America Merrill Lynch Banco Múltiplo S.A.
|
Bank
|
|
Nominal Amount
|
|
Strike price
|
|
Maturity
|
||||||||
|
Currency
|
|
Amount
|
|
Call option written
|
Call option bought
|
|
|||||||
Citibank S.A.
|
|
$
|
|
50,000
|
|
|
|
4.49
|
|
|
3.11
|
|
|
September 2023
|
JP Morgan S.A.
|
|
$
|
|
50,000
|
|
|
|
5.20
|
|
|
3.13
|
|
|
April 2027
|
Bank
|
|
Payable
|
|
Receivable
|
|
Interest payment dates
|
|
Maturity
|
||||||||||||
|
Currency
|
|
Amount
|
|
Interest rate
|
|
Currency
|
|
Amount
|
|
Interest rate
|
|
||||||||
Citibank S.A.
|
|
BRL
|
|
155,500
|
|
|
11.08
|
%
|
|
$
|
|
50,000
|
|
|
6.91
|
%
|
|
June 30/ December 31
|
|
September 2023
|
JP Morgan S.A.
|
|
BRL
|
|
156,250
|
|
|
11.18
|
%
|
|
$
|
|
50,000
|
|
|
6.91
|
%
|
|
March 31/ September 30
|
|
April 2027
|
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)
|
||||||||||||||||
|
2019
|
2018
|
2017
|
|
2019
|
2018
|
2017
|
|||||||||||||
Forward contracts
|
|
$
|
(10
|
)
|
$
|
731
|
|
$
|
(1,344
|
)
|
|
$
|
(711
|
)
|
$
|
(75
|
)
|
$
|
1,236
|
|
Cross-currency interest rate swaps
|
|
(8,506
|
)
|
11,279
|
|
5,828
|
|
|
2,056
|
|
(18,888
|
)
|
1,965
|
|
||||||
Call Spread
|
|
4,377
|
|
4,034
|
|
21,047
|
|
|
(3,561
|
)
|
(15,421
|
)
|
2,791
|
|
||||||
Coupon-only swap
|
|
(1,889
|
)
|
1,864
|
|
(13,598
|
)
|
|
1,860
|
|
2,415
|
|
(5,933
|
)
|
||||||
Total
|
|
$
|
(6,028
|
)
|
$
|
17,908
|
|
$
|
11,933
|
|
|
$
|
(356
|
)
|
$
|
(31,969
|
)
|
$
|
59
|
|
(i)
|
The results recognized in income related to forward contracts were recorded as an adjustment to food and paper. The net gain (loss) recognized in income, related to cross-currency interest rate swaps is presented as follows:
|
Adjustment to:
|
2019
|
|
2018
|
|
2017
|
||||||
Foreign currency exchange results
|
$
|
6,346
|
|
|
$
|
28,588
|
|
|
$
|
7,532
|
|
Net interest expense
|
(8,402
|
)
|
|
(9,700
|
)
|
|
(9,497
|
)
|
|||
Total
|
$
|
(2,056
|
)
|
|
$
|
18,888
|
|
|
$
|
(1,965
|
)
|
|
|
Cross-currency swaps (i)
|
|
Derivatives in Fair Value Hedging Relationships
|
|
2017
|
|
|
|
|
|
Loss recognized in Income on hedging derivatives
|
|
(9,599
|
)
|
Gain recognized in Income on hedging items
|
|
4,118
|
|
(i)
|
The loss amounting to $5,481 in 2017, related to the ineffective portion of derivatives, was recorded within “Gain (loss) from derivative instruments” in the Company’s consolidated statement of income.
|
|
|
Restaurant
|
|
Other
|
|
Total (i)
|
||||||
2020
|
|
$
|
143,982
|
|
|
$
|
5,387
|
|
|
$
|
149,369
|
|
2021
|
|
136,699
|
|
|
3,968
|
|
|
140,667
|
|
|||
2022
|
|
130,637
|
|
|
2,822
|
|
|
133,459
|
|
|||
2023
|
|
125,830
|
|
|
2,383
|
|
|
128,213
|
|
|||
2024
|
|
121,880
|
|
|
2,258
|
|
|
124,138
|
|
|||
Thereafter
|
|
976,397
|
|
|
8,017
|
|
|
984,414
|
|
|||
Total minimum payment
|
|
$
|
1,635,425
|
|
|
$
|
24,835
|
|
|
$
|
1,660,260
|
|
Lease discount
|
|
|
|
|
|
(728,531
|
)
|
|||||
Operating lease liability
|
|
|
|
|
|
$
|
931,729
|
|
(i)
|
The Company has certain leases subject to index adjustments. Historically, the Company has calculated and disclosed future minimum payments for these leases using the inflation index rate as of the end of the reporting period. As part of the adoption of ASC 842, the Company used the effective index rate at transition date in its disclosure and calculation of the lease liability. However, for leases entered into after January 1, 2019, the inflation index rate will be used to calculate the lease liability only when a lease modification occurs.
|
Other information
|
|
|
2019
|
|||
Cash paid for amounts included in the measurement of lease liabilities
|
|
|||||
Operating cash flows from operating leases
|
$
|
135,788
|
|
|||
Right-of-use assets obtained in exchange for new lease liabilities
|
|
|||||
Operating leases
|
|
118,285
|
|
|||
Weighted-average remaining lease term (years)
|
|
|
||||
Operating leases
|
|
|
|
8
|
|
|
Weighted-average discount rate
|
|
|
||||
Operating leases
|
|
|
|
5
|
%
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
Rent (i)
|
|
$
|
145,860
|
|
|
$
|
148,094
|
|
|
$
|
155,405
|
|
Initial fees (ii) (iii)
|
|
287
|
|
|
195
|
|
|
1,205
|
|
|||
Royalty fees (iv)
|
|
643
|
|
|
673
|
|
|
659
|
|
|||
Total
|
|
$
|
146,790
|
|
|
$
|
148,962
|
|
|
$
|
157,269
|
|
(i)
|
Includes rental income of own buildings and subleases. As of December 31, 2019 the subleases rental income amounted to $114,459.
|
(ii)
|
Presented net of initial fees paid to McDonald’s Corporation for $1,456, $1,323 and $1,417 in 2019, 2018 and 2017, respectively.
|
(iii)
|
On January 1, 2018, the Company adopted ASC 606 “Revenue Recognition - Revenue from Contracts with Customers”. As such, initial franchise fees received are deferred over the term of the franchise agreement. See Note 3 Revenue Recognition, for details.
|
(iv)
|
Presented net of royalties fees paid to McDonald’s Corporation for $57,709, $57,733 and $64,806 in 2019, 2018 and 2017, respectively.
|
|
|
Owned sites
|
|
Leased sites
|
|
Total
|
||||||
2020
|
|
$
|
4,063
|
|
|
$
|
59,424
|
|
|
$
|
63,487
|
|
2021
|
|
3,220
|
|
|
54,161
|
|
|
57,381
|
|
|||
2022
|
|
2,391
|
|
|
48,699
|
|
|
51,090
|
|
|||
2023
|
|
2,154
|
|
|
41,998
|
|
|
44,152
|
|
|||
2024
|
|
2,048
|
|
|
35,618
|
|
|
37,666
|
|
|||
Thereafter
|
|
9,938
|
|
|
173,639
|
|
|
183,577
|
|
|||
Total
|
|
$
|
23,814
|
|
|
$
|
413,539
|
|
|
$
|
437,353
|
|
|
|
2019
|
|
2018
|
|
2017
|
Puerto Rico
|
|
18.5%
|
|
20.0%
|
|
20.0%
|
Curacao
|
|
22.0%
|
|
22.0%
|
|
35.0%
|
USVI
|
|
22.5%
|
|
22.5%
|
|
35.0%
|
Aruba
|
|
25.0%
|
|
25.0%
|
|
35.0%
|
Panamá, Uruguay, Trinidad and Tobago and Netherlands
|
|
25.0%
|
|
25.0%
|
|
25.0%
|
Ecuador
|
|
25.0%
|
|
28.0%
|
|
25.0%
|
Chile
|
|
27.0%
|
|
27.0%
|
|
25.5%
|
Peru
|
|
29.5%
|
|
29.5%
|
|
29.5%
|
Argentina
|
|
30.0%
|
|
30.0%
|
|
35.0%
|
Costa Rica and Mexico
|
|
30.0%
|
|
30.0%
|
|
30.0%
|
Martinique, French Guyana and Guadeloupe
|
|
31.0%
|
|
33.3%
|
|
35.0%
|
Colombia
|
|
33.0%
|
|
37.0%
|
|
40.0%
|
Brazil and Venezuela
|
|
34.0%
|
|
34.0%
|
|
34.0%
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
Current income tax expense
|
|
$
|
46,811
|
|
|
$
|
47,488
|
|
|
$
|
51,215
|
|
Deferred income tax expense
|
|
(7,974
|
)
|
|
648
|
|
|
2,099
|
|
|||
Income tax expense
|
|
$
|
38,837
|
|
|
$
|
48,136
|
|
|
$
|
53,314
|
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
Pre-tax income
|
|
$
|
118,953
|
|
|
$
|
85,169
|
|
|
$
|
182,813
|
|
Weighted-average statutory income tax rate (i)
|
|
36.6
|
%
|
|
42.7
|
%
|
|
35.5
|
%
|
|||
Income tax expense at weighted-average statutory tax rate on pre-tax income
|
|
43,488
|
|
|
36,354
|
|
|
64,901
|
|
|||
Permanent differences:
|
|
|
|
|
|
|
||||||
Change in valuation allowance (ii)
|
|
(24,864
|
)
|
|
(24,307
|
)
|
|
(21,241
|
)
|
|||
Expiration and changes in tax loss carryforwards (iii)
|
|
17,799
|
|
|
18,599
|
|
|
12,785
|
|
|||
Venezuelan remeasurement and inflationary impacts (iv)
|
|
1,743
|
|
|
16,857
|
|
|
2,683
|
|
|||
Non-taxable income and non-deductible expenses
|
|
7,667
|
|
|
8,406
|
|
|
10,157
|
|
|||
Tax benefits
|
|
(9,667
|
)
|
|
(11,403
|
)
|
|
(10,744
|
)
|
|||
Income taxes withholdings on intercompany transactions (v)
|
|
5,005
|
|
|
7,723
|
|
|
6,804
|
|
|||
Differences including exchange rate, inflation adjustment and filing differences
|
|
(2,647
|
)
|
|
(2,815
|
)
|
|
(11,909
|
)
|
|||
Alternative Taxes
|
|
658
|
|
|
(1,283
|
)
|
|
156
|
|
|||
Others
|
|
(345
|
)
|
|
5
|
|
|
(278
|
)
|
|||
Income tax expense
|
|
$
|
38,837
|
|
|
$
|
48,136
|
|
|
$
|
53,314
|
|
(i)
|
Weighted-average statutory income tax rate is calculated based on the aggregated amount of the income before taxes by country multiplied by the prevailing statutory income tax rate, divided by the consolidated income before taxes.
|
(ii)
|
Comprises net changes in valuation allowances for the year, mainly related to net operating losses.
|
(iii)
|
Expiration of loss tax carryforwards are mainly generated by holding legal entities and the Caribbean division.
|
(iv)
|
Comprises changes in valuation allowance during 2019, 2018 and 2017 for $983, $(304) and $2,108, respectively.
|
(v)
|
Comprises income tax withheld on the payment of interest on intercompany loans.
|
|
|
2019
|
|
2018
|
||||
Tax loss carryforwards (i)
|
|
$
|
144,759
|
|
|
$
|
178,993
|
|
Purchase price allocation adjustment
|
|
15,158
|
|
|
17,006
|
|
||
Property and equipment, tax inflation
|
|
36,690
|
|
|
38,588
|
|
||
Other accrued payroll and other liabilities
|
|
33,065
|
|
|
30,300
|
|
||
Share-based compensation
|
|
2,062
|
|
|
2,591
|
|
||
Provision for contingencies
|
|
2,534
|
|
|
2,708
|
|
||
Other deferred tax assets (ii)
|
|
56,927
|
|
|
26,193
|
|
||
Other deferred tax liabilities (iii)
|
|
(32,280
|
)
|
|
(7,979
|
)
|
||
Property and equipment - difference in depreciation rates
|
|
(418
|
)
|
|
(11,103
|
)
|
||
Valuation allowance (iv)
|
|
(194,426
|
)
|
|
(219,920
|
)
|
||
Net deferred tax asset
|
|
$
|
64,071
|
|
|
$
|
57,377
|
|
(i)
|
As of December 31, 2019, the Company and its subsidiaries has accumulated net operating losses amounting to $540,231. The Company has net operating losses amounting to $192,736, expiring between 2020 and 2024. In addition, the Company has net operating losses amounting to $122,109 expiring after 2024 and net operating losses amounting to $225,386 that do not expire. Changes in tax loss carryforwards for the year relate to expiration of net operating losses (NOLs), mainly in holding legal entities and uses of NOLs, mainly in Brazil and Chile.
|
(ii)
|
Other deferred tax assets reflect the net tax effects of temporary differences between the carrying amounts of assets for financial reporting purposes (accounting base) and the amounts used for income tax purposes (tax base). For the fiscal year ended December 31, 2019, this item includes: difference in depreciation of leases (related to differences between ASC842 and local tax regulation) for $30,524 mainly in Brazil; provision for regular expenses for $10,376 mainly Brazil, Mexico and Colombia; and bad debt reserve in Puerto Rico for $4,218. For the fiscal year ended December 31, 2018 this item includes bad debt reserve in Puerto Rico for $4,967, provision for regular expenses for $10,458, mainly corresponding to Brazil, Mexico and Colombia; and foreign currency exchange differences in Argentina and Brazil for $4,736.
|
(iii)
|
Primarily related to leases contracts (related to differences between ASC842 and local tax regulation) and accelerated depreciation of fixed assets.
|
(iv)
|
In assessing the realization 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.
|
|
|
Units
|
|
Weighted-average strike price
|
|
Weighted-average grant-date fair value
|
|||
Outstanding at December 31, 2016
|
|
776,475
|
|
|
15.55
|
|
|
4.46
|
|
Expired (i)
|
|
(141,986
|
)
|
|
21.20
|
|
|
5.28
|
|
Outstanding at December 31, 2017
|
|
634,489
|
|
|
14.28
|
|
|
4.28
|
|
Expired (i)
|
|
(143,416
|
)
|
|
21.20
|
|
|
5.89
|
|
Outstanding at December 31, 2018
|
|
491,073
|
|
|
12.26
|
|
|
3.81
|
|
Expired (i)
|
|
(216,633
|
)
|
|
14.35
|
|
|
5.13
|
|
Outstanding at December 31, 2019
|
|
274,440
|
|
|
10.62
|
|
|
2.77
|
|
Exercisable at December 31, 2019
|
|
274,440
|
|
|
10.62
|
|
|
2.77
|
|
(i)
|
As of December 31, 2019, 2018 and 2017, additional paid-in capital included $1,111, $844 and $750, respectively, related to expired stock options.
|
|
|
Vested (i)
|
|
Number of units outstanding
|
|
274,440
|
|
Weighted-average grant-date fair market value per unit
|
|
2.77
|
|
Total grant-date fair value
|
|
760
|
|
Weighted-average accumulated percentage of service
|
|
100
|
%
|
Stock-based compensation recognized in Additional paid-in capital
|
|
760
|
|
|
|
Units
|
|
Weighted-average grant-date fair value
|
||
Outstanding at December 31, 2016
|
|
1,780,997
|
|
|
6.07
|
|
2017 annual grant
|
|
497,960
|
|
|
9.20
|
|
Partial vesting
|
|
(361,284
|
)
|
|
7.65
|
|
Forfeitures
|
|
(180,828
|
)
|
|
5.99
|
|
Outstanding at December 31, 2017
|
|
1,736,845
|
|
|
6.65
|
|
2018 annual grant
|
|
520,393
|
|
|
8.50
|
|
Partial vesting
|
|
(534,589
|
)
|
|
6.01
|
|
Forfeitures
|
|
(117,600
|
)
|
|
7.24
|
|
Outstanding at December 31, 2018
|
|
1,605,049
|
|
|
7.41
|
|
2019 annual grant
|
|
35,000
|
|
|
8.00
|
|
Partial vesting of 2014 grant
|
|
(38,222
|
)
|
|
8.58
|
|
Partial vesting of 2015 grant
|
|
(115,634
|
)
|
|
6.33
|
|
Partial vesting of 2016 grant
|
|
(134,501
|
)
|
|
4.70
|
|
Partial vesting of 2017 grant
|
|
(174,232
|
)
|
|
9.20
|
|
Forfeitures
|
|
(239,621
|
)
|
|
7.74
|
|
Outstanding at December 31, 2019
|
|
937,839
|
|
|
7.50
|
|
Exercisable at December 31, 2019
|
|
—
|
|
|
—
|
|
Number of units outstanding (i)
|
937,839
|
|
Weighted-average grant-date fair market value per unit
|
7.50
|
|
Total grant-date fair value
|
7,034
|
|
Weighted-average accumulated percentage of service
|
67.40
|
%
|
Stock-based compensation recognized in Additional paid-in capital
|
4,741
|
|
Compensation expense not yet recognized (ii)
|
2,293
|
|
(i)
|
Related to awards that will vest between fiscal years 2020 and 2023.
|
(ii)
|
Expected to be recognized in a weighted-average period of 1.2 years.
|
|
|
Units
|
|
||
Grant 2019
|
|
1,672,657
|
|
|
|
Forfeited
|
|
(10,837
|
)
|
|
|
Outstanding at December 31, 2019
|
|
1,661,820
|
|
|
|
|
Total Non-vested (i)
|
||
Number of units outstanding
|
1,661,820
|
|
|
Current share price
|
8.10
|
|
|
Total fair value of the plan
|
13,461
|
|
|
Weighted-average accumulated percentage of service
|
15.62
|
%
|
|
Accrued liability (ii)
|
2,102
|
|
|
Compensation expense not yet recognized (iii)
|
11,359
|
|
|
(i)
|
Related to awards that will vest between May 2021 and May 2024.
|
(ii)
|
Presented within “Accrued payroll and other liabilities” in the Company’s non current liabilities balance sheet.
|
(iii)
|
Expected to be recognized in a weighted-average period of 3.97 years.
|
(i)
|
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;
|
(ii)
|
to pay monthly royalties commencing at a rate of approximately 5% of gross sales of the restaurants, during the first 10 years, substantially consistent with market. This percentage increases to 6% and 7% for the subsequent two 5-year periods of the agreement. Nevertheless, on occasions McDonald’s provides the Company with support in order to encourage the Company growth plan;
|
(iii)
|
to commit to funding a specified Strategic Marketing Plan;
|
(iv)
|
to own (or lease) directly or indirectly, the fee simple interest in all real property on which any franchised restaurant is located; and
|
(v)
|
to maintain a minimum fixed charge coverage ratio (as defined therein) at least equal to 1.50 as well as a maximum leverage ratio (as defined therein) of 4.25.
|
|
|
Fixed Charge Coverage Ratio
|
|
Leverage Ratio
|
|
||
March 31, 2019
|
|
1.83
|
|
|
3.83
|
|
|
June 30, 2019
|
|
1.86
|
|
|
3.76
|
|
|
September 30, 2019
|
|
1.80
|
|
|
3.83
|
|
|
December 31, 2019
|
|
1.86
|
|
|
3.77
|
|
|
Description
|
|
Balance at beginning of period
|
|
Accruals, net
|
|
Settlements
|
|
Reclassifications and increase of judicial deposits
|
|
Translation
|
|
Balance at end of period
|
||||||||||||
Year ended December 31, 2019:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Tax contingencies in Brazil (i)
|
|
$
|
9,497
|
|
|
$
|
1,455
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(357
|
)
|
|
$
|
10,595
|
|
Labor contingencies in Brazil (ii)
|
|
21,108
|
|
|
12,916
|
|
|
(16,068
|
)
|
|
—
|
|
|
(1,117
|
)
|
|
16,839
|
|
||||||
Other (iii)
|
|
11,462
|
|
|
3,070
|
|
|
(1,700
|
)
|
|
—
|
|
|
(1,428
|
)
|
|
11,404
|
|
||||||
Subtotal
|
|
42,067
|
|
|
17,441
|
|
|
(17,768
|
)
|
|
—
|
|
|
(2,902
|
)
|
|
38,838
|
|
||||||
Judicial deposits (iv)
|
|
(13,558
|
)
|
|
—
|
|
|
—
|
|
|
354
|
|
|
524
|
|
|
(12,680
|
)
|
||||||
Provision for contingencies
|
|
$
|
28,509
|
|
|
$
|
17,441
|
|
|
$
|
(17,768
|
)
|
|
$
|
354
|
|
|
$
|
(2,378
|
)
|
|
$
|
26,158
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Year ended December 31, 2018:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Tax contingencies in Brazil (i)
|
|
$
|
9,324
|
|
|
$
|
1,805
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(1,632
|
)
|
|
$
|
9,497
|
|
Labor contingencies in Brazil (ii)
|
|
21,061
|
|
|
20,785
|
|
|
(17,718
|
)
|
|
—
|
|
|
(3,020
|
)
|
|
21,108
|
|
||||||
Other (iii)
|
|
15,646
|
|
|
1,405
|
|
|
(1,984
|
)
|
|
—
|
|
|
(3,605
|
)
|
|
11,462
|
|
||||||
Subtotal
|
|
46,031
|
|
|
23,995
|
|
|
(19,702
|
)
|
|
—
|
|
|
(8,257
|
)
|
|
42,067
|
|
||||||
Judicial deposits (iv)
|
|
(18,075
|
)
|
|
—
|
|
|
—
|
|
|
1,843
|
|
|
2,674
|
|
|
(13,558
|
)
|
||||||
Provision for contingencies
|
|
$
|
27,956
|
|
|
$
|
23,995
|
|
|
$
|
(19,702
|
)
|
|
$
|
1,843
|
|
|
$
|
(5,583
|
)
|
|
$
|
28,509
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Year ended December 31, 2017:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Tax contingencies in Brazil (i)
|
|
$
|
13,312
|
|
|
$
|
(2,599
|
)
|
|
$
|
(337
|
)
|
|
$
|
(667
|
)
|
|
$
|
(385
|
)
|
|
$
|
9,324
|
|
Labor contingencies in Brazil (ii)
|
|
11,150
|
|
|
31,448
|
|
|
(21,130
|
)
|
|
—
|
|
|
(407
|
)
|
|
21,061
|
|
||||||
Other (iii)
|
|
12,222
|
|
|
7,150
|
|
|
(3,960
|
)
|
|
17
|
|
|
217
|
|
|
15,646
|
|
||||||
Subtotal
|
|
36,684
|
|
|
35,999
|
|
|
(25,427
|
)
|
|
(650
|
)
|
|
(575
|
)
|
|
46,031
|
|
||||||
Judicial deposits (iv)
|
|
(18,572
|
)
|
|
161
|
|
|
—
|
|
|
(60
|
)
|
|
396
|
|
|
(18,075
|
)
|
||||||
Provision for contingencies
|
|
$
|
18,112
|
|
|
$
|
36,160
|
|
|
$
|
(25,427
|
)
|
|
$
|
(710
|
)
|
|
$
|
(179
|
)
|
|
$
|
27,956
|
|
(i)
|
In 2019, 2018 and 2017, it includes mainly CIDE.
|
(ii)
|
It primarily relates to dismissals in the normal course of business.
|
(iii)
|
It relates to tax and labor contingencies in other countries and civil contingencies in all the countries.
|
(iv)
|
It primarily relates to judicial deposits the Company was required to make in connection with the proceedings in Brazil.
|
|
|
Quoted Prices in
Active Markets
For Identical Assets
(Level 1)
|
|
Significant Other
Observable Inputs
(Level 2)
|
|
Significant
Unobservable Inputs
(Level 3)
|
|
Balance as of
December 31,
|
|
Balance as of
December 31,
|
||||||||||||||||||||||
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||||||||||
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Cash equivalents
|
|
$
|
49,038
|
|
|
$
|
118,948
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
49,038
|
|
|
$
|
118,948
|
|
Short-term Investments
|
|
25
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
25
|
|
|
—
|
|
||||||||
Derivatives
|
|
—
|
|
|
—
|
|
|
58,107
|
|
|
55,463
|
|
|
—
|
|
|
—
|
|
|
58,107
|
|
|
55,463
|
|
||||||||
Total Assets
|
|
$
|
49,063
|
|
|
$
|
118,948
|
|
|
$
|
58,107
|
|
|
$
|
55,463
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
107,170
|
|
|
$
|
174,411
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Derivatives
|
|
$
|
—
|
|
|
—
|
|
|
14,037
|
|
|
$
|
14,203
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
14,037
|
|
|
14,203
|
|
||||
Total Liabilities
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
14,037
|
|
|
$
|
14,203
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
14,037
|
|
|
$
|
14,203
|
|
|
|
For the fiscal years ended December 31,
|
||||||||||
|
|
2019
|
|
2018
|
|
2017
|
||||||
Revenues:
|
|
|
|
|
|
|
||||||
Brazil
|
|
$
|
1,385,566
|
|
|
$
|
1,345,453
|
|
|
$
|
1,496,573
|
|
Caribbean division
|
|
399,251
|
|
|
483,743
|
|
|
474,822
|
|
|||
NOLAD
|
|
431,266
|
|
|
406,848
|
|
|
386,874
|
|
|||
SLAD
|
|
742,994
|
|
|
845,527
|
|
|
961,256
|
|
|||
Total revenues
|
|
$
|
2,959,077
|
|
|
$
|
3,081,571
|
|
|
$
|
3,319,525
|
|
|
|
|
|
|
|
|
||||||
Adjusted EBITDA:
|
|
|
|
|
|
|
||||||
Brazil
|
|
$
|
227,844
|
|
|
$
|
218,391
|
|
|
$
|
218,172
|
|
Caribbean division
|
|
24,955
|
|
|
(8,281
|
)
|
|
40,844
|
|
|||
NOLAD
|
|
39,027
|
|
|
32,313
|
|
|
33,717
|
|
|||
SLAD
|
|
63,120
|
|
|
73,670
|
|
|
87,083
|
|
|||
Total reportable segments
|
|
354,946
|
|
|
316,093
|
|
|
379,816
|
|
|||
Corporate and others (i)
|
|
(63,171
|
)
|
|
(58,096
|
)
|
|
(74,879
|
)
|
|||
Total adjusted EBITDA
|
|
$
|
291,775
|
|
|
$
|
257,997
|
|
|
$
|
304,937
|
|
|
|
For the fiscal years ended December 31,
|
||||||||||
|
|
2019
|
|
2018
|
|
2017
|
||||||
Adjusted EBITDA reconciliation:
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
||||||
Total Adjusted EBITDA
|
|
$
|
291,775
|
|
|
$
|
257,997
|
|
|
$
|
304,937
|
|
|
|
|
|
|
|
|
||||||
(Less) Plus items excluded from computation that affect operating income:
|
|
|
|
|
|
|
|
|
|
|||
Depreciation and amortization
|
|
(123,218
|
)
|
|
(105,800
|
)
|
|
(99,382
|
)
|
|||
Gains from sale or insurance recovery of property and equipment
|
|
5,175
|
|
|
4,973
|
|
|
95,081
|
|
|||
Write-offs of property and equipment
|
|
(4,733
|
)
|
|
(4,167
|
)
|
|
(8,528
|
)
|
|||
Impairment of long-lived assets
|
|
(8,790
|
)
|
|
(18,950
|
)
|
|
(17,564
|
)
|
|||
Impairment of goodwill
|
|
(273
|
)
|
|
(167
|
)
|
|
(200
|
)
|
|||
Reorganization and optimization plan expenses
|
|
—
|
|
|
(11,003
|
)
|
|
—
|
|
|||
2008 Long-Term Incentive Plan incremental compensation from modification
|
|
—
|
|
|
575
|
|
|
(1,409
|
)
|
|||
Operating income
|
|
159,936
|
|
|
123,458
|
|
|
272,935
|
|
|||
(Less) Plus:
|
|
|
|
|
|
|
|
|
|
|||
Net interest expense
|
|
(52,079
|
)
|
|
(52,868
|
)
|
|
(68,357
|
)
|
|||
Gain (loss) from derivative instruments
|
|
439
|
|
|
(565
|
)
|
|
(7,065
|
)
|
|||
Foreign currency exchange results
|
|
12,754
|
|
|
14,874
|
|
|
(14,265
|
)
|
|||
Other non-operating (expenses) income, net
|
|
(2,097
|
)
|
|
270
|
|
|
(435
|
)
|
|||
Income tax expense
|
|
(38,837
|
)
|
|
(48,136
|
)
|
|
(53,314
|
)
|
|||
Net income attributable to non-controlling interests
|
|
(220
|
)
|
|
(186
|
)
|
|
(333
|
)
|
|||
Net income attributable to Arcos Dorados Holdings Inc.
|
|
$
|
79,896
|
|
|
$
|
36,847
|
|
|
$
|
129,166
|
|
|
|
For the fiscal years ended December 31,
|
||||||||||
|
|
2019
|
|
2018
|
|
2017
|
||||||
Depreciation and amortization:
|
|
|
|
|
|
|
||||||
Brazil
|
|
$
|
63,467
|
|
|
$
|
52,632
|
|
|
$
|
52,442
|
|
Caribbean division
|
|
18,481
|
|
|
22,835
|
|
|
25,210
|
|
|||
NOLAD
|
|
21,422
|
|
|
20,829
|
|
|
20,635
|
|
|||
SLAD
|
|
20,713
|
|
|
19,293
|
|
|
15,292
|
|
|||
Total reportable segments
|
|
124,083
|
|
|
115,589
|
|
|
113,579
|
|
|||
Corporate and others (i)
|
|
4,894
|
|
|
5,696
|
|
|
5,978
|
|
|||
Purchase price allocation (ii)
|
|
(5,759
|
)
|
|
(15,485
|
)
|
|
(20,175
|
)
|
|||
Total depreciation and amortization
|
|
$
|
123,218
|
|
|
$
|
105,800
|
|
|
$
|
99,382
|
|
|
|
|
|
|
|
|
||||||
Property and equipment expenditures:
|
|
|
|
|
|
|
||||||
Brazil
|
|
$
|
146,322
|
|
|
$
|
100,926
|
|
|
$
|
91,769
|
|
Caribbean division
|
|
15,934
|
|
|
18,640
|
|
|
16,759
|
|
|||
NOLAD
|
|
32,662
|
|
|
24,145
|
|
|
17,565
|
|
|||
SLAD
|
|
70,280
|
|
|
53,300
|
|
|
48,621
|
|
|||
Others
|
|
37
|
|
|
30
|
|
|
52
|
|
|||
Total property and equipment expenditures
|
|
$
|
265,235
|
|
|
$
|
197,041
|
|
|
$
|
174,766
|
|
|
|
As of December 31,
|
||||||
|
|
2019
|
|
2018
|
||||
Total assets:
|
|
|
|
|
||||
Brazil
|
|
$
|
1,328,984
|
|
|
$
|
751,550
|
|
Caribbean division
|
|
429,170
|
|
|
303,467
|
|
||
NOLAD
|
|
458,235
|
|
|
247,697
|
|
||
SLAD
|
|
389,976
|
|
|
291,300
|
|
||
Total reportable segments
|
|
2,606,365
|
|
|
1,594,014
|
|
||
Corporate and others (i)
|
|
67,195
|
|
|
105,835
|
|
||
Purchase price allocation (ii)
|
|
(115,875
|
)
|
|
(121,810
|
)
|
||
Total assets
|
|
$
|
2,557,685
|
|
|
$
|
1,578,039
|
|
(i)
|
Primarily relates to corporate general and administrative expenses, corporate supply chain operations in Uruguay, and related assets. Corporate general and administrative expenses consist of corporate office support costs in areas such as facilities, finance, human resources, information technology, legal, marketing, restaurant operations, supply chain and training. As of December 31, 2019 and 2018, corporate assets primarily includes corporate cash and cash equivalents, lease right of use and derivatives.
|
(ii)
|
Relates to the purchase price allocation adjustment made at corporate level, which reduces the total assets and the corresponding depreciation and amortization.
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
Write down of inventories (i)
|
|
$
|
(4,468
|
)
|
|
$
|
(61,007
|
)
|
|
$
|
(4,079
|
)
|
Impairment of long-lived assets (i)
|
|
(2,123
|
)
|
|
(12,089
|
)
|
|
(8,563
|
)
|
|||
Foreign currency exchange (loss) income (ii)
|
|
(583
|
)
|
|
5,061
|
|
|
(4,269
|
)
|
(i)
|
Presented within Other operating income (expenses), net.
|
(ii)
|
Presented within Foreign currency exchange results.
|
|
|
Foreign currency translation
|
|
Cash flow hedges
|
|
Post-employment benefits (i)
|
|
Total Accumulated other comprehensive loss
|
||||||||
Balances at December 31, 2016
|
|
$
|
(441,081
|
)
|
|
$
|
305
|
|
|
$
|
(873
|
)
|
|
$
|
(441,649
|
)
|
Other comprehensive income (loss) before reclassifications
|
|
4,800
|
|
|
6,462
|
|
|
(938
|
)
|
|
10,324
|
|
||||
Net loss reclassified from accumulated other comprehensive loss to consolidated statement of income
|
|
—
|
|
|
1,592
|
|
|
386
|
|
|
1,978
|
|
||||
Net current-period other comprehensive income (loss)
|
|
4,800
|
|
|
8,054
|
|
|
(552
|
)
|
|
12,302
|
|
||||
Balances at December 31, 2017
|
|
(436,281
|
)
|
|
8,359
|
|
|
(1,425
|
)
|
|
(429,347
|
)
|
||||
Other comprehensive (loss) income before reclassifications
|
|
(62,996
|
)
|
|
13,888
|
|
|
(418
|
)
|
|
(49,526
|
)
|
||||
Net (income) loss reclassified from accumulated other comprehensive income to consolidated statement of income
|
|
—
|
|
|
(23,887
|
)
|
|
494
|
|
|
(23,393
|
)
|
||||
Net current-period other comprehensive (loss) income
|
|
(62,996
|
)
|
|
(9,999
|
)
|
|
76
|
|
|
(72,919
|
)
|
||||
Balances at December 31, 2018
|
|
(499,277
|
)
|
|
(1,640
|
)
|
|
(1,349
|
)
|
|
(502,266
|
)
|
||||
Other comprehensive loss before reclassifications
|
|
(12,168
|
)
|
|
(5,185
|
)
|
|
(55
|
)
|
|
(17,408
|
)
|
||||
Net loss reclassified from accumulated other comprehensive loss to consolidated statement income
|
|
—
|
|
|
85
|
|
|
864
|
|
|
949
|
|
||||
Adoption of ASU 2017-12
|
|
—
|
|
|
(780
|
)
|
|
—
|
|
|
(780
|
)
|
||||
Net current-period other comprehensive (loss) income
|
|
(12,168
|
)
|
|
(5,880
|
)
|
|
809
|
|
|
(17,239
|
)
|
||||
Balances at December 31, 2019
|
|
$
|
(511,445
|
)
|
|
$
|
(7,520
|
)
|
|
$
|
(540
|
)
|
|
$
|
(519,505
|
)
|
(i)
|
Mainly related to a post-employment benefit in Venezuela established by the Organic Law of Labor and Workers (known as “LOTTT”, its Spanish acronym) in 2012. This benefit provides a payment of 30 days of salary per year of employment tenure based on the last wage earned to all workers who leave the job for any reason. The term of service to calculate the post-employment payment of active workers run retroactively since June 19, 1997. The Company obtains an actuarial valuation to measure the post-employment benefit
|
|
|
For the fiscal years ended December 31,
|
||||||||||
|
|
2019
|
|
2018
|
|
2017
|
||||||
Net income attributable to Arcos Dorados Holdings Inc. available to common shareholders
|
|
$
|
79,896
|
|
|
$
|
36,847
|
|
|
$
|
129,166
|
|
Weighted-average number of common shares outstanding - Basic
|
|
204,003,977
|
|
|
209,136,832
|
|
|
210,935,685
|
|
|||
Incremental shares from assumed exercise of stock options (i)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Incremental shares from vesting of restricted share units
|
|
664,375
|
|
|
983,634
|
|
|
1,060,726
|
|
|||
Weighted-average number of common shares outstanding - Diluted
|
|
204,668,352
|
|
|
210,120,466
|
|
|
211,996,411
|
|
|||
|
|
|
|
|
|
|
||||||
Basic net income per common share attributable to Arcos Dorados Holdings Inc.
|
|
$
|
0.39
|
|
|
$
|
0.18
|
|
|
$
|
0.61
|
|
Diluted net income per common share attributable to Arcos Dorados Holdings Inc.
|
|
$
|
0.39
|
|
|
$
|
0.18
|
|
|
$
|
0.61
|
|
(i)
|
Options to purchase shares of common stock were outstanding during fiscal years 2019, 2018 and 2017. See Note 17 for details. These options were not included in the computation of diluted earnings per share because their inclusion would have been anti-dilutive.
|
|
|
As of December 31,
|
||||||
|
|
2019
|
|
2018
|
||||
Accounts and notes receivable, net
|
|
$
|
177
|
|
|
$
|
860
|
|
Other receivables
|
|
2,201
|
|
|
1,676
|
|
||
Miscellaneous
|
|
3,719
|
|
|
2,963
|
|
||
Accounts payable
|
|
(8,747
|
)
|
|
(14,984
|
)
|
|
|
Fiscal years ended December 31,
|
||||||||||
|
|
2019
|
|
2018
|
|
2017
|
||||||
Food and paper (i)
|
|
$
|
(188,276
|
)
|
|
$
|
(177,356
|
)
|
|
$
|
(173,387
|
)
|
Occupancy and other operating expenses
|
|
(7,252
|
)
|
|
(5,322
|
)
|
|
(4,281
|
)
|
(i)
|
Includes $38,658 of distribution fees and $149,618 of suppliers purchases managed through the Axionlog Business for the fiscal year ended December 31, 2019; $41,633 and $135,723, respectively, for the fiscal year ended December 31, 2018; and $48,773 and $124,614, respectively, for the fiscal year ended December 31, 2017.
|
Description
|
|
Balance at beginning of period
|
|
Additions (i)
|
|
Deductions (ii)
|
|
Translation
|
|
Balance at end of period
|
||||||||||
Year ended December 31, 2019:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Deducted from assets accounts:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Allowance for doubtful accounts (iii)
|
|
$
|
25,539
|
|
|
$
|
8,524
|
|
|
$
|
(10,892
|
)
|
|
$
|
(95
|
)
|
|
$
|
23,076
|
|
Valuation allowance on deferred tax assets
|
|
219,920
|
|
|
2,375
|
|
|
(26,252
|
)
|
|
(1,617
|
)
|
|
194,426
|
|
|||||
Reported as liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Provision for contingencies
|
|
28,509
|
|
|
17,795
|
|
|
(17,768
|
)
|
|
(2,378
|
)
|
|
26,158
|
|
|||||
Total
|
|
$
|
273,968
|
|
|
$
|
28,694
|
|
|
$
|
(54,912
|
)
|
|
$
|
(4,090
|
)
|
|
$
|
243,660
|
|
Year ended December 31, 2018:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Deducted from assets accounts:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Allowance for doubtful accounts (iii)
|
|
$
|
21,467
|
|
|
$
|
6,064
|
|
|
$
|
(1,860
|
)
|
|
$
|
(132
|
)
|
|
$
|
25,539
|
|
Valuation allowance on deferred tax assets
|
|
271,651
|
|
|
13,107
|
|
|
(37,718
|
)
|
|
(27,120
|
)
|
|
219,920
|
|
|||||
Reported as liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Provision for contingencies
|
|
27,956
|
|
|
25,838
|
|
|
(19,702
|
)
|
|
(5,583
|
)
|
|
28,509
|
|
|||||
Total
|
|
$
|
321,074
|
|
|
$
|
45,009
|
|
|
$
|
(59,280
|
)
|
|
$
|
(32,835
|
)
|
|
$
|
273,968
|
|
Year ended December 31, 2017:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Deducted from assets accounts:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Allowance for doubtful accounts (iii)
|
|
$
|
16,367
|
|
|
$
|
6,386
|
|
|
$
|
(1,244
|
)
|
|
$
|
(42
|
)
|
|
$
|
21,467
|
|
Valuation allowance on deferred tax assets
|
|
290,620
|
|
|
8,382
|
|
|
(27,515
|
)
|
|
164
|
|
|
271,651
|
|
|||||
Reported as liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Provision for contingencies
|
|
18,112
|
|
|
36,160
|
|
|
(26,137
|
)
|
|
(179
|
)
|
|
27,956
|
|
|||||
Total
|
|
$
|
325,099
|
|
|
$
|
50,928
|
|
|
$
|
(54,896
|
)
|
|
$
|
(57
|
)
|
|
$
|
321,074
|
|
(i)
|
Additions in valuation allowance on deferred tax assets are charged to income tax expense.
|
(ii)
|
Deductions in valuation allowance on deferred tax assets are charged to income tax expense.
|
(iii)
|
Presented in the consolidated balance sheet as follow: $22,442 and $24,999 at December 31, 2019 and 2018, respectively, within Accounts and notes receivable, net and $634 and $540 at December 31, 2019 and 2018, respectively, within Other receivables.
|
a.
|
Dividend distribution
|
b.
|
Effects of Covid-19 on operations
|
•
|
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.
|
(a)
|
keep at the office of its registered agent or at such other place or places, within or outside the British Virgin Islands, as the directors may determine, the records and underlying documentation of the company;
|
(b)
|
retain the records and underlying documentation for a period of at least five years from the date: (i) of completion of the transaction to which the records and underlying documentation relate; or (ii) the company terminates the business relationship to which the records and underlying documentation relate; and
|
(c)
|
provide its registered agent without delay any records and underlying documentation in respect of the company that the registered agent requests pursuant to the entitlement of the company’s registered agent to make such a request where the registered agent is required to do so by the British Virgin Islands Financial Services Commission or any other competent authority in the British Virgin Islands acting pursuant to the exercise of a power under an enactment.
|
(a)
|
are sufficient to show and explain the company’s transactions; and
|
(b)
|
will, at any time, enable the financial position of the company to be determined with reasonable accuracy.
|
(a)
|
record of the physical address of the place at which the records and underlying documentation are kept; and
|
(b)
|
record of the name of the person who maintains and controls the company’s records and underlying documentation.
|
(a)
|
its registered agent with the physical address of the new location of the records and underlying documentation; or
|
(b)
|
the name of the new person who maintains and controls the company’s records and underlying documentation.
|
(a)
|
“business relationship” means a continuing arrangement between a company and one or more persons with whom the company engages in business, whether on a one-off, regular or habitual basis; and
|
(b)
|
“records and underlying documentation” includes accounts and records (such as invoices, contracts and similar documents) in relation to: (i) all sums of money received and expended by the company and the matters in respect of which the receipt and expenditure takes place; (ii) all sales and purchases of goods by the company; and (iii) the assets and liabilities of the company.
|
ARTICLE I
|
DEFINITIONS 1
|
Section 1.1
|
Defined Terms 1
|
Section 1.2
|
Rules of Construction 19
|
ARTICLE II
|
LOANS 21
|
Section 2.1
|
Loans 21
|
Section 2.2
|
Borrowing 21
|
Section 2.3
|
Termination of Commitment 21
|
Section 2.4
|
Repayment of the Loans 21
|
Section 2.5
|
Optional Prepayment; Mandatory Prepayment 21
|
Section 2.6
|
Interest Rates and Interest Payment Dates 21
|
Section 2.7
|
Commitment Fee 22
|
Section 2.8
|
Note 23
|
Section 2.9
|
Inability to Determine Interest Rate 23
|
Section 2.10
|
Payments Generally 23
|
Section 2.11
|
Illegality 24
|
Section 2.12
|
Taxes 24
|
Section 2.13
|
Requirements of Law 26
|
Section 2.14
|
Mitigation Obligations 27
|
Section 2.15
|
Breakage Costs 27
|
Section 2.16
|
Survival 27
|
ARTICLE III
|
REPRESENTATIONS AND WARRANTIES 28
|
Section 3.1
|
Financial Condition; No Material Adverse Effect 28
|
Section 3.2
|
Existence and Qualification; Power 28
|
Section 3.3
|
Authorization; Enforceable Obligations; No Contravention 28
|
Section 3.4
|
Governmental Authorization; Other Consents 29
|
Section 3.5
|
No Material Litigation 29
|
Section 3.6
|
Taxes 29
|
Section 3.7
|
Compliance with Laws 29
|
Section 3.8
|
Intellectual Property; Licenses, Etc 30
|
Section 3.9
|
Ranking 30
|
Section 3.10
|
Full Disclosure 30
|
Section 3.11
|
Form of Documents. 30
|
Section 3.12
|
Environmental Matters 31
|
Section 3.13
|
Use of Proceeds 31
|
Section 3.14
|
Investment Company Act 31
|
Section 3.15
|
Anti-Corruption Law and Sanctions 31
|
Section 3.16
|
Consolidated EBITDA of Guarantors 31
|
ARTICLE IV
|
CONDITIONS PRECEDENT 31
|
Section 4.1
|
Conditions to Closing 31
|
Section 4.2
|
Conditions to each Borrowing 32
|
ARTICLE V
|
AFFIRMATIVE COVENANTS 33
|
Section 5.1
|
Financial Statements and Other Information 33
|
Section 5.2
|
Other Affirmative Covenants 35
|
Section 5.3
|
Use of Proceeds 36
|
Section 5.4
|
Rank of Obligations 36
|
Section 5.5
|
Subsidiaries 36
|
Section 5.6
|
Anti-Corruption and Sanctions 38
|
ARTICLE VI
|
NEGATIVE COVENANTS 38
|
Section 6.1
|
Liens 38
|
Section 6.2
|
Fundamental Changes 41
|
Section 6.3
|
Affiliate Transactions 41
|
Section 6.4
|
Lines of Businesses 43
|
Section 6.5
|
Consolidated Net Indebtedness to EBITDA Ratio 43
|
ARTICLE VII
|
EVENTS OF DEFAULT 43
|
Section 7.1
|
Events of Default 43
|
ARTICLE VIII
|
GUARANTY 47
|
Section 8.1
|
Guaranty 47
|
Section 8.2
|
Guaranty Unconditional 48
|
Section 8.3
|
Discharge only upon Payment in Full; Reinstatement
|
Section 8.4
|
Waivers by the Guarantors 48
|
Section 8.5
|
Subrogation 49
|
Section 8.6
|
Stay of Acceleration 49
|
ARTICLE IX
|
MISCELLANEOUS 49
|
Section 9.1
|
Right of Set-Off 49
|
Section 9.2
|
New York Time 49
|
Section 9.3
|
Amendments; Waivers 50
|
Section 9.4
|
Notices 50
|
Section 9.5
|
Successors and Assigns 50
|
Section 9.6
|
Reimbursement of Costs and Expenses 52
|
Section 9.7
|
Indemnification 52
|
Section 9.8
|
Severability 53
|
Section 9.9
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Counterparts 53
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Section 9.10
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Governing Law; Jurisdiction 53
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Section 9.11
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Jury Trial Waiver 54
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Section 9.12
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Process Agent Appointment 54
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Section 9.13
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Waiver of Immunity 54
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Section 9.14
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USA PATRIOT Act 55
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Section 9.15
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Judgment Currency 55
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Section 9.16
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Confidentiality 55
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Section 9.17
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Entire Agreement 56
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Section 1.2
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Rules of Construction.
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Section 2.5
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Optional Prepayment; Mandatory Prepayment.
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Section 2.6
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Interest Rates and Interest Payment Dates.
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Section 2.13
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Requirements of Law.
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Section 8.1
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Guaranty.
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Section 9.4
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Notices.
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1.1.1.1.1.
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Schedule 1.1
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1.1.1.1.2.
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Schedule 3.5
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1.1.1.1.2.1.
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EXHIBIT A
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1.1.1.1.2.2.
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EXHIBIT B
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1.1.1.1.3.
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LOANS AND PAYMENTS WITH RESPECT THERETO
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|
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Amount of
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|
|
|
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Principal or
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Outstanding
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|||
End of
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Interest
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Principal
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|||
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Amount of
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Interest
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Paid This
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Balance
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Notation
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Date
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Loan Made
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Period
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Date
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This Date
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Made By
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1.1.1.1.3.1.
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EXHIBIT C
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1.1.1.1.3.2.
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[select one:]
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1.1.1.1.4.1.
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--or--
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1.1.1.1.5.
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ARCOS DORADOS HOLDINGS INC.
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1.1.1.1.6.
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SCHEDULE 1
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I.
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Section 5.5 – Guarantors’ Share of Consolidated EBITDA.
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A.
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Consolidated EBITDA of the Borrower for Statement Period:
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1.
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Consolidated Net Income of the Borrower during Statement Period:
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U.S.$
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2.
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Consolidated Interest Expense of the Borrower
|
|
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during Statement Period:
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U.S.$
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3.
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Consolidated Income Tax Expense of the Borrower
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during Statement Period:
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U.S.$
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4.
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Consolidated Non-cash Charges of the Borrower
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|
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during Statement Period:
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U.S.$
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5.
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any non-operating and/or non-recurring charges,
|
|
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expenses or losses of the Borrower and its
|
|
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Subsidiaries during Statement Period:
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U.S.$
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6.
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the amount of loss on any sale of accounts
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receivables and related assets to a Securitization
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|
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Subsidiary in connection with a Permitted
Receivables Financing:
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U.S.$
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7.
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all non-cash credits and gains increasing
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Consolidated Net Income for the Borrower during
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|
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Statement Period:
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U.S.$
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8.
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all cash payments made the Borrower and its Subsidiaries during Statement Period relating to non-
|
|
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cash charges that were added back in determining
|
|
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Consolidated EBITDA in any prior period:
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U.S.$
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9.
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non-operating and/or non-recurring income or gains
|
|
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(less all fees and expenses related thereto) increasing
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|
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Consolidated Net Income of the Borrower and its
|
|
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Subsidiaries during Statement Period:
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U.S.$
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10.
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Consolidated EBITDA (Line I.A.1 plus Line I.A.2
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|
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plus Line I.A.3 plus Line I.A.4 plus Line I.A.5 plus
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Line I.A.6 less Line I.A.7 less Line I.A.8 less Line
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B.
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Consolidated EBITDA attributable to Guarantors:
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C.
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Guarantors’ share of Consolidated EBITDA (Line I.B.[5]
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II.
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Section 6.6 – Consolidated Net Indebtedness to EBITDA Ratio.
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A.
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Consolidated Net Indebtedness of Borrower as at Statement Date:
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1.1.1.1.6.1.
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EXHIBIT E
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By:
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Name: Title:
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Name
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Subsidiaries of Registrant
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Exhibit 8.1
Place of Incorporation
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Adcon S.A.
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Argentina
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Administrative Development Company
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Delaware
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Aduy S.A.
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Uruguay
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Alimentos Arcos Dorados de Venezuela C.A.
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Venezuela
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Alimentos Latinoamericanos Venezuela ALV, C.A.
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Venezuela
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Arcgold del Ecuador, S.A.
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Ecuador
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Arcos del Sur, S.R.L.
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Uruguay
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Arcos Dorados Argentina S.A.
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Argentina
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Arcos Dorados Aruba N.V.
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Aruba
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Arcos Dorados B.V.
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Netherlands
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Arcos Dorados Caribbean Development Corp.
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Delaware
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Arcos Dorados Colombia S.A.S
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Colombia
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Arcos Dorados Costa Rica ADCR, S.A.
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Costa Rica
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ADCR Inmobiliaria, S.A.
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Costa Rica
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Arcos Dorados Curacao, N.V.
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Curacao
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Arcos Dorados Development B.V.
|
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Netherlands
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Arcos Dorados French Guiana
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French Guiana
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Arcos Dorados Group B.V.
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Curacao
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Arcos Dorados Guadeloupe
|
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Guadeloupe
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Arcos Dorados Martinique
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Martinique
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Arcos Dorados Panama, S.A.
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Panama
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Arcos Dorados Puerto Rico, LLC
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Puerto Rico
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Arcos Dorados Restaurantes de Chile, Ltda.
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Chile
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Arcos de Valparaiso SpA
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Chile
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Arcos Dorados Trinidad Limited
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Trinidad and Tobago
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Arcos Dorados USVI, Inc.(St. Croix)
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USVI
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Arcos Dourados Comercio de Alimentos Ltda.
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Brazil
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Arcos Dourados Restaurantes Ltda.
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Brazil
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Arcos SerCal Inmobiliaria, S. de R.L. de C.V.
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Mexico
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Restaurantes ADMX, S. de R.L. de C.V.
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Mexico
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Arcos Dorados BraPa S.A.
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Panama
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Compañía de Inversiones Inmobiliarias S.A.
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Argentina
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Complejo Agropecuario Carnico (Carnicos), C.A.
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Venezuela
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Arcos Dorados Uruguay S.A.
|
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Uruguay
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Gerencia Operativa ARC, C.A.
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Venezuela
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Compañía Operativa de Alimentos COR, C.A.
|
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Venezuela
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Golden Arch Development LLC
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Delaware
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LatAm, LLC
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|
Delaware
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Logistics and Manufacturing LOMA Co.
|
|
Delaware
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Management Operations Company
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Delaware
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Operaciones Arcos Dorados de Perú, S.A.
|
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Peru
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Restaurant Realty of Mexico, Inc.
|
|
Delaware
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Sistemas Central America, S.A.
|
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Panama
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Sistemas McOpCo Panama, S.A.
|
|
Panama
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Arcos Dorados Latam LLC
|
|
Delaware
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Arcos SEM Panama SA
|
|
Panama
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Arcos Dorados Paisas S.A.S.
|
|
Colombia
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Arcos Mendocinos S.A.
|
|
Argentina
|
|
|
|
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;
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3.
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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;
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4.
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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:
|
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/ Marcelo Rabach
|
Name: Marcelo Rabach
|
Title: 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:
|
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/ Mariano Tannenbaum
|
Name: Mariano Tannenbaum
|
Title: 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/ Marcelo Rabach
|
Name: Marcelo Rabach
|
Title: 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/ Mariano Tannenbaum
|
Name: Mariano Tannenbaum
|
Title: Chief Financial Officer
|
|
(1)
|
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
|