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TheStreet Open House

Burger King Worldwide, Inc. Reports Second Quarter 2012 Results

As part of BKW’s international expansion strategy, the company announced the establishment of two joint ventures with proven franchisees in Russia and China. In Russia, the joint venture has committed to open several hundred restaurants over the next few years. In China, the joint venture has committed to open 1,000 restaurants over the next five to seven years, representing the largest multi-unit development agreement in the brand’s history.

Cash and Liquidity

At quarter end, total debt was $3.1 billion and net debt was $2.7 billion. During the six months ended June 30, 2012, BKW repurchased and retired Senior Notes with an aggregate face value of $3.0 million and repurchased Discount Notes with an aggregate accreted value of $61.1 million, which represents 13.6% of the original issuance. As a result of the improvement in net debt and in trailing twelve month adjusted EBITDA, the net debt to adjusted EBITDA ratio improved to 4.2x at June 30, 2012 from 4.6x at December 31, 2011.

Public Offering

On June 20, 2012, Burger King Worldwide Holdings, Inc. announced the consummation of its business combination with a subsidiary of Justice Holdings Limited. As a result of this transaction, the shares of Burger King Worldwide were listed on the New York Stock Exchange under the ticker symbol “BKW.” Following the listing, the investment fund affiliated with 3G Capital Partners Ltd. continued to hold approximately 71% of the outstanding shares.

I nvestor Conference Call

The company will host an investor conference call and webcast at 9:00 a.m. EDT, Wednesday, August 1, 2012, to review financial results for the quarter ended June 30, 2012. The earnings call will be broadcast live via the company's investor relations website at http://investor.bk.com and will be available for replay. The dial-in number is 866.244.4576 for U.S. callers and 703.639.1174 for international callers.

About Burger King Worldwide

Founded in 1954, BURGER KING ® (NYSE: BKW) is the second largest fast food hamburger chain in the world. The original HOME OF THE WHOPPER ®, the BURGER KING ® system operates in over 12,600 locations serving over 11 million guests daily in 86 countries and territories worldwide. Approximately 94 percent of BURGER KING ® restaurants are owned and operated by independent franchisees, many of them family-owned operations that have been in business for decades. To learn more about Burger King Worldwide, please visit the company's website at www.bk.com or follow us on Facebook and Twitter.

Forward-Looking Statements

This press release contains certain forward-looking statements, which reflect management's expectations regarding future events and operating performance and speak only as of the date hereof. These forward-looking statements are not guarantees of future performance and involve a number of risks and uncertainties. These forward-looking statements include statements about the Company’s expectations and belief regarding its ability to lay the foundation for accelerated development through strategic partnerships and capitalize on future opportunities in high growth markets; its expectations and belief regarding its ability to remain focused on its core business strategies; its expectations and belief regarding its ability to position itself for long-term growth; and its expectations and beliefs regarding the success of its newly-established joint-ventures in Russia and China. The factors that could cause actual results to differ materially from the Company’s expectations are detailed in the Company's filings with the Securities and Exchange Commission, such as its annual and quarterly reports and current reports on Form 8-K, including the following: risks related to the Company’s ability to successfully implement its domestic and international growth strategy; risks related to global economic or other business conditions that may affect the desire or ability of customers to purchase the Company’s products; risks related to the financial strength of the Company’s franchisees; risks related to the Company’s ability to compete domestically and internationally in an intensely competitive industry; and risks related to the effectiveness of the Company’s marketing and advertising programs.

BURGER KING WORLDWIDE, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(Unaudited)
         
Three Months Ended
June 30, Increase / (Decrease)
2012 2011 $ %
(In millions, except %'s)
Revenues:
Company restaurant revenues $ 345.9 $ 419.0 $ (73.1 ) (17.4 )%
Franchise and property revenues   194.9     176.4   18.5   10.5 %
Total revenues 540.8 595.4 (54.6 ) (9.2 )%
Company restaurant expenses:
Food, paper and product costs 115.0 135.4 (20.4 ) (15.1 )%
Payroll and employee benefits 100.2 122.2 (22.0 ) (18.0 )%
Occupancy and other operating costs   90.5     111.6   (21.1 ) (18.9 )%
Total Company restaurant expenses 305.7 369.2 (63.5 ) (17.2 )%
Franchise and property expenses 28.5 23.2 5.3 22.8 %
Selling, general and administrative expenses 95.8 99.3 (3.5 ) (3.5 )%
Other operating (income) expense, net   (17.1 )   4.7   (21.8 ) NM  
Total operating costs and expenses   412.9     496.4   (83.5 ) (16.8 )%
Income from operations   127.9     99.0   28.9   29.2 %
Total interest expense, net 57.2 56.1 1.1 2.0 %
Loss on early extinguishment of debt   7.7     -   7.7   NM  
Income before income taxes 63.0 42.9 20.1 46.9 %
Income tax expense   14.8     12.7   2.1   16.5 %
Net income $ 48.2   $ 30.2 $ 18.0   59.6 %
 
NM - not meaningful
 
BURGER KING WORLDWIDE, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(Unaudited)
 
Six Months Ended
June 30, Increase / (Decrease)
2012 2011 $ %
(In millions, except %'s)
Revenues:
Company restaurant revenues $ 742.1 $ 811.5 $ (69.4 ) (8.6 )%
Franchise and property revenues   368.6     335.9   32.7   9.7 %
Total revenues 1,110.7 1,147.4 (36.7 ) (3.2 )%
Company restaurant expenses:
Food, paper and product costs 245.0 262.4 (17.4 ) (6.6 )%
Payroll and employee benefits 219.7 242.2 (22.5 ) (9.3 )%
Occupancy and other operating costs   195.0     221.3   (26.3 ) (11.9 )%
Total Company restaurant expenses 659.7 725.9 (66.2 ) (9.1 )%
Franchise and property expenses 52.3 46.3 6.0 13.0 %
Selling, general and administrative expenses 190.8 199.7 (8.9 ) (4.5 )%
Other operating (income) expense, net   (4.1 )   12.5   (16.6 ) NM  
Total operating costs and expenses   898.7     984.4   (85.7 ) (8.7 )%
Income from operations   212.0     163.0   49.0   30.1 %
Total interest expense, net 116.3 106.3 10.0 9.4 %
Loss on early extinguishment of debt   11.2     19.6   (8.4 ) (42.9 )%
Income before income taxes 84.5 37.1 47.4 127.8 %
Income tax expense   22.0     12.8   9.2   71.9 %
Net income $ 62.5   $ 24.3 $ 38.2   157.2 %
 
NM - not meaningful
BURGER KING WORLDWIDE, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(Unaudited)
     
As of
June 30, December 31,
2012 2011

ASSETS

(In millions, except share data)
Current assets:
Cash and cash equivalents $ 377.7 $ 459.0
Trade and notes receivable, net 150.5 152.8
Prepaids and other current assets, net 146.1 69.2
Deferred income taxes, net   22.9     43.1  
Total current assets 697.2 724.1
 

Property and equipment, net of accumulated depreciation of $193.6 million and $150.1 million,

respectively

906.9 1,026.5
Intangible assets, net 2,784.6 2,823.3
Goodwill 639.8 657.7
Net investment in property leased to franchisees 232.9 242.2
Other assets, net   185.1     134.6  

Total assets

$ 5,446.5   $ 5,608.4  

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
Accounts and drafts payable $ 82.1 $ 98.4
Accrued advertising 93.8 97.4
Other accrued liabilities 192.5 242.7
Current portion of long term debt and capital leases   35.9     33.5  
Total current liabilities 404.3 472.0
 
Term debt, net of current portion 2,911.7 3,010.3
Capital leases, net of current portion 106.1 95.4
Other liabilities, net 360.9 366.2
Deferred income taxes, net   568.3     615.3  
Total liabilities   4,351.3     4,559.2  
 
Commitments and Contingencies
 
Stockholders' equity:
Preferred stock, $0.01 par value; 200,000,000 shares authorized;
no shares issued or outstanding - -
Common stock, $0.01 par value; 2,000,000,000 shares authorized;
350,025,166 shares issued and outstanding at June 30, 2012;
348,245,293 shares issued and outstanding at December 31, 2011 3.5 3.5
Additional paid-in capital 1,199.6 1,186.6
Retained earnings (accumulated deficit) 34.9 (27.6 )
Accumulated other comprehensive loss   (142.8 )   (113.3 )
Total stockholders' equity   1,095.2     1,049.2  
Total liabilities and stockholders' equity $ 5,446.5   $ 5,608.4  
 
BURGER KING WORLDWIDE, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(Unaudited)
  Six Months Ended
June 30,
2012   2011
Cash flows from operating activities: (In millions)
Net income $ 62.5 $ 24.3
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 67.4 68.8
Loss on early extinguishment of debt 11.2 19.6
Amortization of deferred financing cost and debt issuance discount 29.4 15.8
Loss (gain) on remeasurement of foreign denominated transactions (3.6 ) 1.5
Amortization of prior service costs (0.9 ) -
Realized loss on terminated caps/swaps

0.9

-
Gain on refranchisings and dispositions of assets (2.7 ) (1.7 )
Bad debt expense, net of recoveries 1.5 1.1
Share-based compensation 7.6 0.6
Deferred income taxes 8.0 17.7
Changes in current assets and liabilities, excluding acquisitions and dispositions:
Trade and notes receivables (4.2 ) 8.7
Prepaids and other current assets

(35.1

) 19.4
Accounts and drafts payable (15.8 ) (33.0 )
Accrued advertising (45.4 ) 4.1
Other accrued liabilities (47.1 ) (35.3 )
Other long-term assets and liabilities   3.2     (16.7 )
Net cash provided by operating activities   36.9     94.9  
Cash flows from investing activities:
Payments for property and equipment (13.8 ) (23.5 )
Proceeds from refranchisings, disposition of assets and restaurant closures 36.5 11.7
Payments for acquired franchisee operations, net of cash acquired (15.3 ) -
Return of investment on direct financing leases 6.6 7.3
Other investing activities   -     (4.4 )
Net cash provided by (used for) investing activities   14.0     (8.9 )
Cash flows from financing activities:
Proceeds from term debt - 1,860.0
Proceeds from discount notes - 401.5
Repayments of term debt and capital leases (19.0 ) (1,852.4 )
Extinguishment of debt (105.9 ) -
Payment of financing costs - (32.6 )
Proceeds from issuance of shares   -     1.8  
Net cash provided by (used for) financing activities   (124.9 )   378.3  
Effect of exchange rates on cash and cash equivalents (7.3 ) 5.1
Increase (decrease) in cash and cash equivalents (81.3 ) 469.4
Cash and cash equivalents at beginning of period   459.0     207.0  
Cash and cash equivalents at end of period $ 377.7   $ 676.4  
 

BURGER KING Worldwide, INC. AND SUBSIDIARIES

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