Brazil Fast Food Announces Fourth Quarter and Fiscal Year 2008 Results

Business Wire, April 09, 2009

EBITDA in the fourth quarter of 2008 was R$2.7 million, compared to R$3.6 million in the fourth quarter of 2007. EBITDA margin was 7.1% in the fourth quarter of 2008, compared to 12.5% in the comparable period of 2007. A table reconciling EBITDA to its nearest GAAP equivalent is provided elsewhere in this press release.

Interest expense was R$9.7 million which included a non-recurring R$ 6.7 million loss associated with the depreciation of the Brazilian currency which adversely impacted the Company’s US dollar denominated debt incurred to finance the IRB acquisition. Interest expense also included a non recurring charge of R$2.7 million due to a nominal readjustment of part of its fiscal long-term debt with the federal government.

Net loss for the fourth quarter of 2008 was R$7.8 million or R$0.96 per basic and diluted share, compared to net income and earnings per share of R$6.8 million and R$0.84 in the same period of 2007, respectively. Net income for the fourth quarter of 2008 includes a one-time financing cost and foreign currency exchange loss of R$6.7 million, as well as a one-time loss of R$2.7 million associated with recalculation of interest on fiscal debt that was added to the principal owed to the Federal government, absent those charges net income for fourth quarter of 2008 would be R$1.7 million.

Fiscal Year 2008 Results

For the twelve months ended in December 31, 2008, net revenue was R$123.4 million, up 7.8% from R$114.4 million in 2007. Operating income for fiscal year 2008 was R$5.9 million, down 38.3% from R$9.9 million in 2007. Operating margin was 4.7% for 2008 compared to 8.6% in 2007. EBITDA for 2008 was R$9,354 compared to R$13,106 in 2007. Excluding one time gains of approximately R$644 thousand and R$5.5 million related to a revaluation of tax assets, EBITDA would be up 16% in 2008 relative to 2007. Net loss for 2008 was R$3.9 million compared to net income of R$13.5 million in 2007. Basic and diluted loss per share was R$0.48 for 2008 compared to basic and diluted earnings per share of R$1.65 for 2007. Net income for 2008 includes a one-time financing and foreign currency exchange loss of R$6.7 million, as well as a one-time loss of R$2.7 million associated with the recalculation of interest on fiscal debt that was added to the principal owed to the Federal government, absent those charges net income for 2008 would be R$5.5 million.

Financial Condition

As of the balance sheet date on December 31, 2008 the Company had R$10.4 million in cash. Cash flow from operations for 2008 totaled R$5.6 million, compared to R$3.2 million in 2007. Capital expenditures totaled R$19.7 million in 2008 mostly for expanding the KFC restaurant network as well as acquiring IRB. Shareholders' equity was R$18.5 million at the end of the fourth quarter of 2008, compared to R$23.5 million at the end of 2007.