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TheStreet Open House

Burger King Worldwide, Inc. Reports Third Quarter 2012 Results

Stocks in this article: BKW

Initiation of Quarterly Cash Dividend

The company also announced that its Board of Directors has approved the initiation of a quarterly cash dividend. On October 28, 2012, the Board declared the company’s first quarterly cash dividend of $0.04 per share, which will be paid on November 29, 2012 to shareholders of record at the close of business on November 9, 2012. Future dividends will be determined at the discretion of the Board of Directors.

Investor Conference Call

The company will host an investor conference call and webcast at 9:00 a.m. EDT, Monday, October 29, 2012, to review financial results for the quarter ended September 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 866.244.6521 for U.S. callers and 703.639.1157 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 83 countries and territories worldwide. Approximately 95 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 deliver a strong finish to a critical year for the BURGER KING® system; its expectations and belief regarding its ability to execute on its four pillar strategy in the U.S. and Canada and accelerate restaurant growth internationally; its expectations and belief regarding the cash flow generated by its business model and its ability to achieve annualized cash interest savings of approximately $25 million; its expectations and belief regarding the company’s ability to drive incremental traffic in Brazil and Mexico and its expectations regarding its ability to double its restaurant count in Singapore and Malaysia over the next five years. 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 substantial indebtedness; 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
September 30, Increase / (Decrease)
2012 2011 $ %
(In millions, except per share data)
Revenues:
Company restaurant revenues $ 244.6 $ 422.8 $ (178.2 ) (42.1)%
Franchise and property revenues   206.5   184.9     21.6   11.7%
Total revenues 451.1 607.7 (156.6 ) (25.8)%
Company restaurant expenses:
Food, paper and product costs 79.7 134.9 (55.2 ) (40.9)%
Payroll and employee benefits 71.9 122.3 (50.4 ) (41.2)%
Occupancy and other operating costs   64.7   113.0     (48.3 ) (42.7)%
Total Company restaurant expenses 216.3 370.2 (153.9 ) (41.6)%
Franchise and property expenses 34.7 25.3 9.4 37.2%
Selling, general and administrative expenses 76.0 103.3 (27.3 ) (26.4)%
Other operating (income) expense, net   30.3   (2.7 )   33.0   NM
Total operating costs and expenses   357.3   496.1     (138.8 ) (28.0)%
Income from operations   93.8   111.6     (17.8 ) (15.9)%
Total interest expense, net 57.3 59.4 (2.1 ) (3.5)%
Loss on early extinguishment of debt   23.0   -     23.0   NM
Income before income taxes 13.5 52.2 (38.7 ) (74.1)%
Income tax expense   6.9   13.4     (6.5 ) (48.5)%
Net income $ 6.6 $ 38.8   $ (32.2 ) (83.0)%
 
Earnings per share:
Basic $ 0.02 $ 0.11   $ (0.09 ) (83.1)%
Diluted $ 0.02 $ 0.11   $ (0.09 ) (83.3)%
Weighted average shares outstanding
Basic   350.0   348.3     1.7   0.5%
Diluted   355.0   348.3     6.8   1.9%
 
NM - not meaningful
 
     
BURGER KING WORLDWIDE, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(Unaudited)
   
Nine Months Ended
September 30, Increase / (Decrease)
2012 2011 $ %
(In millions, except per share data)
Revenues:
Company restaurant revenues $ 986.7 $ 1,234.3 $ (247.6 ) (20.1)%
Franchise and property revenues   575.1   520.8   54.3   10.4%
Total revenues 1,561.8 1,755.1 (193.3 ) (11.0)%
Company restaurant expenses:
Food, paper and product costs 324.7 397.3 (72.6 ) (18.3)%
Payroll and employee benefits 291.6 364.5 (72.9 ) (20.0)%
Occupancy and other operating costs   259.7   334.3   (74.6 ) (22.3)%
Total Company restaurant expenses 876.0 1,096.1 (220.1 ) (20.1)%
Franchise and property expenses 87.0 71.6 15.4 21.5%
Selling, general and administrative expenses 266.8 303.0 (36.2 ) (11.9)%
Other operating (income) expense, net   26.2   9.8   16.4   NM
Total operating costs and expenses   1,256.0   1,480.5   (224.5 ) (15.2)%
Income from operations   305.8   274.6   31.2   11.4%
Total interest expense, net 173.6 165.7 7.9 4.8%
Loss on early extinguishment of debt   34.2   19.6   14.6   74.5%
Income before income taxes 98.0 89.3 8.7 9.7%
Income tax expense   28.9   26.2   2.7   10.3%
Net income $ 69.1 $ 63.1 $ 6.0   9.5%
 
Earnings per share:
Basic $ 0.20 $ 0.18 $ 0.02   9.1%
Diluted $ 0.20 $ 0.18 $ 0.01   7.9%
Weighted average shares outstanding
Basic   349.4   348.2   1.2   0.4%
Diluted   353.3   348.2   5.2   1.5%
 
NM - not meaningful
 
     
BURGER KING WORLDWIDE, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(Unaudited)
 
As of
September 30, December 31,
2012 2011

ASSETS

(In millions, except share data)
Current assets:
Cash and cash equivalents $ 482.8 $ 459.0
Trade and notes receivable, net 156.5 152.8
Prepaids and other current assets, net 107.3 69.2
Deferred income taxes, net   26.5     43.1  
Total current assets 773.1 724.1
 
Property and equipment, net of accumulated depreciation of $190.4 million and $150.1 million,

respectively

878.5 1,026.5
Intangible assets, net 2,789.7 2,823.3
Goodwill 640.6 657.7
Net investment in property leased to franchisees 229.1 242.2
Other assets, net   169.2     134.6  
Total assets $ 5,480.2   $ 5,608.4  

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
Accounts and drafts payable $ 62.0 $ 98.4
Accrued advertising 87.4 97.4
Other accrued liabilities 212.8 242.7
Current portion of long term debt and capital leases   50.0     33.5  
Total current liabilities 412.2 472.0
 
Term debt, net of current portion 2,910.5 3,010.3
Capital leases, net of current portion 98.0 95.4
Other liabilities, net 372.0 366.2
Deferred income taxes, net   566.6     615.3  
Total liabilities   4,359.3     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;350,113,909 shares issued and outstanding at September 30, 2012;348,245,293 shares issued and outstanding at December 31, 2011

 
3.5 3.5
Additional paid-in capital 1,201.3 1,186.6
Retained earnings (accumulated deficit) 41.5 (27.6 )
Accumulated other comprehensive loss   (125.4 )   (113.3 )
Total stockholders' equity   1,120.9     1,049.2  
Total liabilities and stockholders' equity $ 5,480.2   $ 5,608.4  
 
   
BURGER KING WORLDWIDE, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(Unaudited)
Nine Months Ended
September 30,
2012 2011
Cash flows from operating activities: (In millions)
Net income $ 69.1 $ 63.1
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 96.0 103.1
Loss on early extinguishment of debt 34.2 19.6
Amortization of deferred financing costs and debt issuance discount 43.6 30.7
Loss (gain) on remeasurement of foreign denominated transactions (5.4 ) 4.4
Amortization of prior service costs (1.8 ) -
Realized loss on terminated caps/swaps 10.7 0.3
Net loss (gain) on refranchisings and dispositions of assets 10.4 (2.9 )
Bad debt expense, net of recoveries 2.9 3.9
Share-based compensation 9.3 0.9
Deferred income taxes 8.0 (16.3 )
Changes in current assets and liabilities, excluding acquisitions and dispositions:
Trade and notes receivables (4.1 ) 8.6
Prepaids and other current assets (8.9 ) 91.9
Accounts and drafts payable (34.7 ) (5.0 )
Accrued advertising (31.0 ) 7.2
Other accrued liabilities (47.7 ) (9.0 )
Other long-term assets and liabilities   (6.0 )   14.2  
Net cash provided by operating activities   144.6     314.7  
Cash flows from investing activities:
Payments for property and equipment (37.7 ) (42.0 )
Proceeds from refranchisings, disposition of assets and restaurant closures 70.0 23.2

Investment in/advances to unconsolidated affiliates

- (4.5 )
Payments for acquired franchisee operations, net of cash acquired (15.3 ) -
Return of investment on direct financing leases 10.4 7.8
Restricted cash - (4.3 )
Other investing activities   -     0.5  
Net cash provided by (used for) investing activities   27.4     (19.3 )
Cash flows from financing activities:
Proceeds from term debt 1,733.5 1,860.0
Proceeds from discount notes - 401.5
Repayments of term debt and capital leases (1,754.7 ) (1,866.3 )
Extinguishment of debt (112.8 ) -
Payment of financing costs (16.0 ) (32.6 )
Proceeds from issuance of shares   1.3     1.8  
Net cash provided by (used for) financing activities   (148.7 )   364.4  
Effect of exchange rates on cash and cash equivalents 0.5 (4.2 )
Increase (decrease) in cash and cash equivalents 23.8 655.6
Cash and cash equivalents at beginning of period   459.0     207.0  
Cash and cash equivalents at end of period $ 482.8   $ 862.6  
 

BURGER KING WORLDWIDE, INC. AND SUBSIDIARIES

Key Business Metrics

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